Q1 2022 Intuit Inc Earnings Call

November 18, 2021

And good afternoon. My name is Latif and I will be your conference facilitator. At this time, I would like to welcome everyone to Inuit's first quarter of fiscal year 2022 conference call. All lines have been placed on mute to prevent any background noise. After the speaker's 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.

At this time I would like to welcome everyone to into its first quarter of fiscal year 2022 conference call. All lines have been placed on mute to prevent any background noise.

The speaker's 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, Latif good afternoon and welcome to Intuit's first-quarter fiscal 2022 conference call. I'm here with Intuit's CEO Sasan Goodarzi and Michelle Clatterbuck 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 2021, and our other SEC filings. All of those documents are available on the Investor Relations page of Intuit's website at Intuit.com. We assume no obligation to update any forward-looking statement.

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 2021, and our other SEC filings all of those.

Occupants are available on the Investor Relations page of Intuit's website at Intuit Dot Com, we assume no obligation to update any forward looking statement.

Some of the numbers in his 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 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. A copy of our prepared remarks and supplemental financial information will be available on our website after this call ends. With that, I'll turn the call over to Sasan.

Otherwise 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.

A copy of our prepared remarks and supplemental financial information will be available on our website after this call ends. With that, I'll turn the call over to Sasan.

Great. Thanks, Kim and thanks to all of you for joining us today. We're off to a strong start in fiscal year 2022 with continued momentum across the company given our strategy of becoming a global AI-driven expert platform powering the prosperity of consumers and small businesses.

We're off to a strong start in fiscal year 2022 with continued momentum across the company given our strategy of becoming a global AI driven expert platform powering the prosperity of consumers and small businesses.

We have nearly a 300 billion dollar addressable market driven by digital tailwind does that include a shift to virtual solutions, acceleration to online and omnichannel capabilities and digital money offering. First-quarter revenue grew 52%, including 32 points from the addition of Credit Karma.

Celebration to online and Omnichannel capabilities and digital money offering.

First quarter revenue grew 52%, including 32 points from the addition of credit Karma.

Total revenue growth was fueled by small business and self-employed group revenue growth of 22%. And Credit Karma revenue of 418 million another record quarter. Consumer group and pro connect group revenue was in line with our expectations in a seasonally small quarter.

Consumer group and pro connect group revenue was in line with our expectations in a seasonally small quarter.

As a result, both of our strong start to the year and the close of Mailchimp transaction, we are raising our revenue and non-GAAP operating income and earnings per share guidance for fiscal year 2020. Michelle will cover this in detail later. Our AI-driven expert platform strategy is accelerating innovation in our five big bets are solving the largest problems our customers face.

Michelle will cover this in detail later.

Our AI driven expert platform strategy is accelerating innovation in our five big bets are solving the largest problems our customers face.

We continued to deliver strong proof points that demonstrate the success and are well-positioned for durable growth in the future. As a reminder, these big bets are revolutionize speed to benefit, connect people to experts, unlock smart money decisions the center of small business growth and disrupt the small business mid market.

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

<unk> people to experts.

Unlock smart money decisions.

The center of small business growth and disrupt the small business mid market today.

Today I'd like to highlight examples of our recent progress across three of these big bets. Our third big bet is to unlock smart money decisions. I'm extremely proud of the momentum we are seeing with Credit Karma. Credit Karma is a data platform with powerful network effects solving a two-sided problem.

Our third big bet is to unlock smart money decisions I'm extremely proud of the momentum we are seeing with credit Karma.

Credit Karma is a data platform with powerful network effects solving a two sided problem.

We are focused on our goal of creating a personal financial assistant that helps consumers find the right financial products, put more money in their pockets and access financial experts and insights. Credit Karma achieved record-high revenue again in Q1. We continue to deliver innovation across all verticals fueled by our proprietary lightbox platform, enabling personalized experiences for our members, creating a network effect. Within the core, partners usage of Lightbox reached all-time highs across both credit cards and personal loans. Lightbox more than doubles the average approval rate for members who apply for credit cards on Credit Karma versus outside of Credit Karma.

More money in their pockets and access financial experts and insights.

Credit Karma achieved record high revenue again in Q1, we.

We continue to deliver innovation across all verticals fueled by our proprietary light box platform, enabling personalized experiences for our members, creating a network effect.

Within the core partners usage of Lightbox reached all time highs across both credit card and personal loan.

Black box more than doubles, the average approval rate for members, who apply for credit cards on credit karma versus outside of credit Karma.

Within the growth verticals, we're solving a larger set of financial challenges for consumers. Karma drive is giving US numbers the opportunity to see if they can save money on auto insurance with usage-based pricing. We're actively exploring expansion opportunities with lightbox in other verticals, including auto loans, building off of the successes we've seen in credit cards and personal loans.

Karma drive is giving us numbers the opportunity to see if they can save money on auto insurance with usage based pricing.

We're actively exploring expansion opportunities with lightbox in other verticals, including auto loans building off of the successes, we've seen in credit cards and personal loans.

Within the emerging verticals, we remain focused on innovation with Credit Karma money. We integrated Credit Karma money into Turbotax last season, and experimented with how we can best meet our customers' needs and announced an integration with QuickBooks online payroll. Given our learnings, we are excited about launching our improved experiences in the coming tax season.

We integrated credit Karma money into Turbotax last season, and experimented with how we can best meet our customers' needs and announced an integration with quickbooks online payroll.

Given our learnings we are excited about launching our improved experiences in the coming tax season.

We believe Credit Karma money is the key to driving growth and frequency of visits over time, one of the many key drivers of average revenue per monthly active user. Zooming out, we continue to grow members and are focused on building trust by delivering personalized financial products right for members, helping members save money pay down debt and get faster access to their money while providing insight and advice.

Zooming out we continue to grow members and are focused on building trust by delivering personalized financial products right for members, helping members save money pay down debt and get faster access to their money, while providing insight and advice.

Over time, we're creating a virtual cycle, which we expect to increase the frequency of engagement, transaction and monetization across our ecosystem. Our fourth big bet is to become the center of small business growth by helping our customers get paid fast manage capital pay employees with confidence and grow in an omnichannel world.

Our fourth Big bet is to become the center of small business growth by helping our customers get customers get paid fast manage capital pay employees with confidence and grow in an omnichannel world.

60% of small businesses struggled with cash flow and we are continuing to innovate to create solutions for customers to overcome this challenge. In fiscal year 2021, total payments volume on our platform grew 40% year over year to over $90 billion. And online payments volume grew more than 60% driven by an increase in customers using our payments offering.

In fiscal year 2021 total payments volume on our platform grew 40% year over year to over $90 billion.

And online payments volume grew more than 60% driven by an increase in customers using our payments offering.

As we continue to innovate for our customers and payments those using QuickBooks cash of nearly three times higher engagement compared to customers who just used Quickbooks online. To accelerate engagement and usage of our platform, we recently introduced get paid upfront, a game-changing innovation that will help qualified customers get paid soon after their invoices.

To accelerate engagement and usage of our platform. We recently introduced get paid upfront a game changing innovation that will help qualified customers get paid soon after their invoices.

Our fifth big bet is to disrupt the small business mid-market with Quickbooks online advanced. We're seeing strong traction with QBO advance with customers growing to 118000 in fiscal year 2021, up 57% year over year. As we continue to move upmarket and serve these customers' most critical need, we're seeing our services ecosystem ARPC that it's four times higher than the ARPC for QBO customers.

We're seeing strong traction with <unk> advance with customers growing to 118000 in fiscal year 2021.

57% year over year.

As we continue to move upmarket and serve these customers more most critical need.

We're seeing our services ecosystem a R. P C that it's four times higher than the IRR P C for <unk> customers.

We're pleased with our results and remain confident in our game plan to win. 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. This will be further fueled by Mailchimp.

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

This will be further fueled by mail chimp.

I'm delighted that we closed Mailchimp. They closed the acquisition earlier this month, which seeks to significantly accelerate two of our big bets. To be the center of small business growth and to disrupt the small business mid-market. Getting engaging customers remains a significant pain point for small and mid-market businesses. We are well on our way to becoming the source of truth for our customers to help them grow and run their businesses.

And to disrupt the small business mid market.

Getting an engaging customers remains a significant pain point for small and mid market businesses.

We are well on our way to becoming the source of truth for our customers to help them grow and run their business.

We have three acceleration priorities with Mailchimp. First priority is to deliver on our vision of an end to end customer growth platform to help customers get their business online, market their business, manage their customers' relationships, get paid, access capital, pay employees manage cash flow and be compliant with virtual expert at their fingertips all in one place.

Get paid access capital pay employees manage cash flow and be compliant with virtual expert at their fingertips all in one place.

Second, disrupting the mid-market by developing a full marketing automation CRM and E-Commerce suite for mid-market customers at an attractive price point, enabling mid-market customers to use the power of the platform to grow their business. And third, accelerating global growth with a holistic go to market approach. With Mailchimp now part of the Intuit family, we are uniquely positioned to enable small and mid-market businesses to combine their customer data from mail chimp and purchase data from QuickBooks to deliver actionable insights they need to grow and run their businesses with confidence.

And third accelerating global growth with a holistic go to market approach.

With mail Chimp now part of the Intuit family, we are uniquely positioned to enable small and mid market businesses to combine their customer data from mail chimp and purchase data from quickbooks to deliver actionable insights they need to grow and run their businesses with confidence.

This is where the real magic happens. Our combined platform technology enables us to move with speed and we've already seen strong interest from our customers. The teams are hard at work and we are excited about the opportunity ahead. Foundational to our company's success is building a high-performance culture. I want to take a moment to acknowledge our progress with our diversity equity and inclusion efforts.

Foundational to our company's success is building a high performance culture.

I want to take a moment to acknowledge our progress with our diversity equity and inclusion efforts.

Last year, we declared our focus on increasing the percentages of women in technology roles and underrepresented minorities across our business. We achieved 30% and 13% respectively, and we are inspired to accelerate our plans and push even harder as much work remains to be done. Additionally, we've made meaningful progress supporting our communities.

We achieved 30% and 13% respectively, and we are inspired to accelerate our plans and push even harder as much work remains to be done.

Additionally, we've made meaningful progress supporting our communities.

First, we recently announced the Intuit climate action marketplace, which will help 1 million US small businesses find sustainable solutions to reduce carbon emissions. This is part of our decade long climate positive goal to go beyond net carbon neutral and reduce global carbon emissions by 2 million metric tons by 2030, or 50 times greater than our 2018 operational footprint.

This is part of our decade long climate positive goal to go beyond net carbon neutral and reduced global carbon emissions by 2 million metric tons by 2030, or 50 times greater than our 2018 operational footprint.

We also recently announced the 23-year partnership with the Los Angeles Clippers that includes economic benefits for the local community with Intuit [Dome] the team's future home. And finally, we launched into adventures to invest in the startup community and accelerate Fintech innovation for consumers and small businesses.

And finally, we launched into adventures to invest in the startup community and accelerate Fintech innovation for consumers and small businesses.

All the work we do starts with our mission of powering prosperity around the world and I'm proud of the momentum across the company and delivering on that mission for our customers and communities. Now let me hand it over to Michelle. Thanks, Sasan. Good afternoon, everyone and I'd also like to welcome the Mailchimp team to Intuit.

Thanks for the time good afternoon, everyone and I'd also like to welcome the mail chimp team to Intuit.

Now, let me turn to the results. For the first quarter of fiscal 202, we delivered revenue of $2 billion. GAAP operating income of $195 million versus $209 million last year. Non-GAAP operating income of $555 million versus $334 million last year. GAAP diluted earnings per share of 82 cents versus 75 cents a year ago. And non-GAAP diluted earnings per share of $1.53 versus 94 cents last year. Note that our GAAP results include a $39 million net gain on other long term investments.

GAAP operating income of $195 million versus $209 million last year.

Non-GAAP operating income of $555 million versus $334 million last year.

GAAP diluted earnings per share of 82 cents versus 75 cents, a year ago and non-GAAP diluted earnings per share of $1 53.

94 cents last year.

Note that our GAAP results include a $39 million net gain on other long term investments.

Turning to the business segments. In the small business and self-employed group, revenue grew 22% during the quarter with online ecosystem revenue up 36%. With the aim of being the source of truth for small businesses, our strategic focus within small businesses and self-employed it's threefold, grow the core connect the ecosystem and expand globally.

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

First, we continue to focus on growing the core. Quickbooks online accounting revenue grew 32% in fiscal Q1, driven mainly by customer growth, higher effective prices and mix shift. Second, we continue to focus on connecting the ecosystem. Online services revenue, which includes payroll payments capital and time tracking, grew 42% in fiscal Q1. Within payroll, we continue to see revenue tailwind during the quarter from growth in payroll customers and the mix shift to our full-service offering.

Second we continue to focus on connecting the ecosystem.

Online services revenue, which includes payroll payments capital and time tracking grew 42% in fiscal Q1.

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

Within payments, revenue growth reflects ongoing customer growth along with an increase in charge volume per customer. Third, our progress expanding globally added to the growth of online ecosystem revenue during fiscal Q1. Total international online revenue grew 39% on a constant currency basis.

Third our progress expanding globally added to the growth of online ecosystem revenue during fiscal Q1.

Total international online revenue grew 39% 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% organically over time. This is driven by 10% to 20% expected growth in both customers and ARPC. Desktop ecosystem revenue grew 7% in the first quarter. QuickBooks desktop enterprise revenue grew high single digits, driven by strong customer growth and price increases we put in place late last year.

This is driven by 10% to 20% expected growth in both customers and our P. C.

Desktop ecosystem revenue grew 7% in the first quarter.

Quickbooks desktop enterprise revenue grew high single digits, driven by strong customer growth and price increases we put in place late last year.

As a reminder, this fall we transitioned to a subscription model for this year's desktop offering, which we expect to be a headwind to revenue growth in the second half of the year. We expect the desktop business to decline longer term.

We expect the desktop business to decline longer term.

Moving on to Credit Karma. Revenue was $418 million in Q1, another record revenue quarter, driven by high levels of monthly active users and revenue per monthly active user within the core we saw another record quarter driven by the combined strength in personal loans and credit cards.

The growth verticals also achieved another strong quarter, reflecting momentum in home loans and auto loans. And we're developing the emerging vertical by focusing on innovation with Credit Karma money, part of our digital money offering. So this is not a large revenue driver today. We continue to expect pent up demand across our core verticals to taper sometime in the second half of fiscal 2022 after a strong year of investment by our partners. We remain excited about the opportunities ahead.

We continue to expect pent up demand across our core verticals to taper sometime in the second half of fiscal 2022 after a strong year of investment by our partners.

We remain excited about the opportunities ahead.

Consumer group revenue of $120 million in Q1 was in line with our expectations. Looking ahead to the upcoming tax season, we continue to focus on our strategy to expand our lead in DIY and transform the assisted segment with TurboTax live. As for the pro connect group, revenue of $26 million in the quarter was also in line with our expectations.

As for the pro connect group revenue of $26 million in the quarter. It was also in line with our expectations.

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%.

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 continue to reallocate resources to top priorities with an emphasis on becoming an AI-driven expert platform. These principles guide our decisions and remain our long term commitment. Our first priority for the cash we generate is investing in the business to drive customer and revenue growth.

These principles guide our decisions and 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 $3.3 billion in cash and investments on our balance sheet. On November 1st we entered into a $4.7 billion term loan under our credit agreement to partially fund the Mailchimp acquisition.

We finished the quarter with approximately $3 $3 billion in cash and investments on our balance sheet.

November 1st we entered into a $4 $7 billion term loan under our new credit arrangement, our credit agreement to partially fund the mail chimp acquisition.

We repurchased $339 million of stock during the first quarter. Depending 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 January 18, 2022. It presents a 15% increase versus last year.

Depending 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 January 18 2022.

It presents a 15% increase versus last year.

Moving on to guidance. We are raising our full-year fiscal 2022 revenue and non-GAAP operating income and earnings per share guidance to reflect both the acquisition of Mailchimp and the stronger than expected start to the year in the small business and self-employed group and Credit Karma.

We are raising our full year fiscal 2022 revenue and non-GAAP operating income and earnings per share guidance to reflect both the acquisition of mail chimp and the stronger than expected start to the year in the small business and self employed group and credit Karma.

Our updated fiscal 2022 guidance includes revenue up $12.165 billion to $12 3 billion growth of 26% to 28%, including Mailchimp as of November 1st and a full year of Credit Karma. Excluding Mailchimp revenue growth of 18% to 20% up from our prior guidance of 15% to 16%. GAAP earnings per share of $7 to $7.16 and non-GAAP earnings per share of $11.48 to $11.64.

<unk> from our prior guidance of 15% to 16%.

GAAP earnings per share of $7 to $7.16 and non-GAAP earnings per share of $11 48 to $11 64 or something.

This updated fiscal 2022 guidance includes organic growth for the small business and self-employed segment of 16% to 17% up from 12% to 14%. Expected Mailchimp revenue of $760 million to $770 million and Credit Karma revenue of $1.54 billion to $1.565 billion, up from $1.345 billion to $1.38 billion. As I shared before, we continue to see opportunities to leverage the platform and drive margin expansion over time. Excluding Mailchimp, our non-GAAP operating income guidance continues to imply approximately 60 basis points of margin expansion in fiscal 2022.

Expected mail chimp revenue of $760 million to $770 million and credit Karma revenue of $1.54 billion to $1.565 billion up from $1.345 billion to $1 three $8 billion.

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

Excluding mail chimp, our non-GAAP operating income guidance continues to imply approximately 60 basis points of margin expansion in fiscal 2022.

Our guidance assumes the Mailchimp transaction is accretive to Intuit non-GAAP earnings per share and full-year fiscal 2022. However, we expect an approximately 80 basis point one time step down in non-GAAP operating margin, reflecting the impact of Mailchimp as we plan to invest aggressively in the business. We expect non-GAAP operating margin expansion to continue from this new level over time in line with our financial principles. Our fiscal 2020 to GAAP operating income guidance includes approximately $165 million for stock-based compensation associated with the acquisition of Mailchimp.

However, we expect an approximately 80 basis 0.1 time step down in non-GAAP operating margin, reflecting the impact of mail chimp as we plan to invest aggressively in the business.

We expect non-GAAP operating margin expansion to continue from this new level over time in line with our financial principles.

Our fiscal 2020 to GAAP operating income guidance includes approximately $165 million for stock based compensation associated with the acquisition of mail chimp in.

In addition, our GAAP operating income guidance includes the impact of the credit Karma acquisition, along with investments we are making in stock compensation to attract and retain talent. We're confident these are the right decisions to drive long term growth. And we expect a GAAP tax rate of 18% in fiscal 2022. Our guidance for the second quarter of fiscal 2022 includes revenue growth of 73% to 74%, GAAP earnings per share of 55 cents to 59 cents and non-GAAP earnings per share of $1.84 to $1.88. You can find our full Q2 and updated fiscal 2022 guidance details in our press release and on our fact sheet. And with that, I'll turn it back to you, Sasan.

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

And we expect a GAAP tax rate of 18% in fiscal 2022.

Our guidance for the second quarter of fiscal 2022 includes revenue growth of 73% to 74%.

GAAP earnings per share of 55 cents to 59 cents and non-GAAP earnings per share of $1 84 to $1 88.

You can find our full Q2 and updated fiscal 2022 guidance details in our press release and on our fact sheet. And with that, I'll turn it back to you, Sasan.

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

Great. Thank you, Michele. We are off to a strong start this year with continued momentum across the company given our strategy of being an AI-driven expert platform, that's powering prosperity for consumers and small businesses. I'm proud of what our employees have accomplished this quarter and I'm excited about the opportunities ahead to find new innovative ways to serve our more than 100 million customers. Now, let's open it up to your questions.

I'm proud of what our employees have accomplished this quarter and I'm excited about the opportunities ahead to find new innovative ways to serve our more than 100 million customers now, let's open it up to your questions.

Yeah.

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 Ken Wong of Guggenheim. Your question, please.

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

Our first question comes from Ken Wong of Guggenheim. Your question. Please.

Great. Thank you so much so fine. Sasan, the success of Lightbox has been very impressive. Just wondering is there a way to quantify kind of where we are in terms of adoption of lightbox within your core credit protocol? And kind of what that potential adoption could look like? And then you touched on expanding into other verticals. What verticals do you think are appropriate to integrate into Lightbox?

Sets of White box has been very impressive just wondering is there a way to quantify kind of where we are in terms of adoption of lightbox within your core credit protocol.

And kind of what that potential adoption could look like and then you touched on expanding into other verticals what verticals do you think.

are appropriate to integrate into Lightbox?

Yeah, Ken. Thanks for the question. You know in terms of Lightbox, you know as we talked about at Investor Day. We've actually made significant progress year over year in terms of penetration. I think what we talked about at Investor Day, we had 50% and. 40% penetration in credit cards and personal loans compared to you know I think 40, 28 a year before. So one, we have significant penetration opportunity ahead of us. I think equally as important if not more is what financial institutions are seeing which is really the payoff for their investments and so more and more financial institutions are joining the platform and this gives us really an opportunity to significantly increase penetration. I think that's the way I would probably give you the punch line you know. Our penetration in credit cards is I think less than 5% just as an example in personal loans and other verticals or even lower than that.

I think what we talked about at Investor Day, we had 50% and.

40% penetration in credit cards, and personal loans compared to you know I think 40 28, a year before so one we have significant penetration opportunity ahead of us I think equally as important if not more is what financial institutions are seeing which is really the pay off.

for their investments and so more and more financial institutions are joining the platform and this gives us really an opportunity to significantly increase penetration. I think that's the way I would probably

give you the punch line you know. Our penetration in credit cards is I think less than 5% just as an example in personal loans and other verticals or even lower than that.

Lightbox the trust, we build with our members that the trust we are building with our partners gives us an opportunity for a significant penetration. And I think our sort of the best years are ahead of us when you think about but when you think about Lightbox and particularly penetration.

The best years are ahead of us when you think about but when you think about light box and particularly our penetration.

In terms of your question around expansion in auto loans is just one example of where we can expand our Lightbox. And that there are other areas that we've not talked about publicly. I won't do it today until we see our further proof points, where we can further expand our Lightbox. So I think this is you know 13 years of investments that now positions us to really deliver for members partners and really create this network effect.

Further expand our life box. So I think this is you know 13 years of investments that now positions us to really deliver for members partners and really create this network effect.

Got it, fantastic. I appreciate the color and then if I could sneak one in for you Michelle. When I look at that Mailchimp number 760 770. Any way to help us understand what that growth might have looked like in a sort of a three-quarter basis versus last year?

Any way to help us understand what that growth might have looked like in a sort of a three quarter basis versus versus last year.

Yeah.

Hi, Ken, you know we're really excited about the mail channel and we think that you know we're going to do some great things together. Their revenue and their new paying user growth were negatively impacted during the pandemic. I would let you know that. And they did pull back on some of their marketing spend.

So they can preserve their profitability and we did see their churn declined some there too. We're gonna be investing aggressively to drive their growth as we go forward it won't happen overnight. But we're really excited about the opportunities we see to grow as we look forward, we haven't really given any additional details on what their gross was previously.

But we're really excited about the opportunities we see to grow as we look forward, we haven't really given any additional details on what their gross was previously.

Okay, understood. Thank you very much, Michelle. Thank you. Our next question comes from Keith Weiss of Morgan Stanley. Your line is open.

Thank you. Our next question comes from Keith Weiss of Morgan Stanley. Your line is open.

Excellent. Thank you guys for taking the question. Really impressive quarter across the board, it's there's just really nothing to pick on in here. I wanted to dig into the Quickbooks online business a little bit. Both sort of the subscriptions and in the online services, both seen acceleration in the quarter. Can you help us understand how much of that is kind of like the continued kind of reflation post the calendar '20 macro impacts? And how much comes from just fundamentally improving attach rates? And you guys are focusing on higher-level customers with [QBO] advance. Is that starting to improve the overall attach rate picture in that business?

Really impressive quarter across the board, it's there's just really nothing to pick on in here.

I wanted to dig into the Quickbooks online business a little bit.

Both sort of the subscriptions and in the online services, both seen acceleration in the quarter can.

Can you help us understand how much of that is kind of like the continued kind of reflation post.

The calendar 'twenty macro impacts.

And how much comes from just fundamentally improving attach rates? And you guys are focusing on higher-level customers with [QBO] advance. Is that starting to improve the overall attach rate picture in that business?

And you guys are focusing on higher level customers with T. V. O advance is that starting to improve the overall attach rate picture in that business.

Yeah. Thanks for the question. You know I would say the majority if not all compared to previous quarters is simply customer growth improved mix based on the traction of Quickbooks advanced, Quickbooks live. To a lesser degree and you know things like full-service payroll and just all the innovation we've been doing in payments with instant deposit and making it easier to use our payments offering. And now our new launch with you know get paid upfront. So I would say the majority of what we're starting to experience is the actual innovation on the platform and the portfolio that we have solving a broad range of needs for our customers. The I would say bounce back from the pandemic of course happened and we started experiencing to pick up but that was I would say four six months ago, I think now we're seeing the actual true performance of the platform.

Lesser degree and you know things like full service payroll and just all the innovation, we've been doing in payments with instant deposit and making it easier to use our payments offering and now our new launch with you know get get paid upfront. So I would say the majority of what we're starting to experience is the actual innovation on the platform and the portfolio that we have solving.

Broad range of needs.

Needs for our customers are you know that the I would say bounce back from the pandemic of course happened and we started experiencing to pick up but that was I would say.

For the six months ago, I think now we're seeing the actual true performance of the platform.

And then maybe a follow up for Michelle. You called out again the potential impacts on the desktop business from a shift towards subscription. Any way you could help us quantify what those impacts are going to be?

Hey, Keith. What I can tell you about desktop as you know obviously, we saw the 7% growth in the ecosystem and first quarter. And that was really driven by two different components. The majority of it with two components first was you saw higher Desktop enterprise customer growth and some price increases. Desktop enterprise revenue growth you know it was a high single digits in Q1, the other half of that is really the desktop subscriber Max. Last year, what we saw was desktop subs grew 48% and outright units declined by 47% and so that growth in subs last year because of the way we do revenue recognition you get like an extra pop up revenue from subscriber growth in the in Q1. And so that is what we saw so we do expect to see you know some headwinds for that growth as we go further out through the rest of the year, especially with all the subscriber growth instead of outright.

Desktop enterprise customer growth and some price increases on.

Desktop enterprise revenue growth you know it was a high single digits in Q1, the other half of that is really the desktop subscriber Max last year, what we saw was desktop screen.

<unk> grew 48% and outright units declined by 47% and so that growth in subs last year because of the way. We do revenue recognition you get like an extra pop up revenue from subscriber growth in the in Q1 and so that is what we saw so we do expect to see you know some headwinds for that growth as we.

Go further out through the rest of the year, especially with all the subscriber growth instead of outright.

Got it alright, thank you, guys. Thank you. Our next question comes from Kirk Materne of Evercore ISI. Your line is open.

Thank you.

Thank you. Our next question comes from Kirk <unk> of Evercore ISI. Your line is open.

Hi. This is Robert on for Kirk. Thanks for taking the question and congratulations on the great quarter. I know it's still early days, but can you talk a little bit about the plan for the go to market with Mailchimp. For example, are you planning to approach customers a one-stop-shop vendor or do you think both will be sold separately given potential different buying centers and companies? Does Mailchimp expand your plans to potentially expand QuickBooks into more geographies on a quicker timeline? And I guess, how do you expect this to evolve over time as you reach a steady-state? Thanks so much.

It's still early days, but can you talk a little bit about the plan for the go to Moshe go to market with mail Chimp. For example are you planning to approach customers a one stop shop vendor or do you think both will be sold separately given potential different buying centers and companies does Nielsen I forget your plans to potentially expand.

Books into more geographies on a quicker time line and I guess, how do you expect this to evolve overtime as you reach steady state. Thanks, so much.

Yeah. Thanks for the question you know. I'll take you back to the three priorities that we've declared because I think it goes after the great question that you've asked. You know first and foremost, our number one priority is really around creating one broker platform and it's really a lot of the work behind the scenes in terms of building data pipelines and connecting the services.

<unk>.

Pipelines in connecting the services.

So that the magical power of the data both Mailchimp data and Quickbooks data can come together for the customer to put the power of the insights in their hands. So first and foremost, is all about the product and creating a one growth platform. The second is we see a huge opportunity to serve mid-market, as you know we're already doing that from a financial management solutions perspective with Quickbooks advance.

To put the power of the insights in their hands. So first and foremost is all about the product and creating a one growth platform. The second is we see a huge opportunity to.

To serve mid market as you know we're already doing that from a financial management solutions perspective, with Quickbooks, a bad word.

And now we're going to build out the capabilities on Mailchimp, and really disrupt the mid-market. Because this is a huge need for mid-market and I would say third is actually having a global playbook and investing accelerating our investments in and go to market, which I think will get at the last question that you asked but I didn't answer yet and that is we want customers to have a choice. So if customers first want to engage with Mailchimp to be able to take their business online to market their business and use CRM tools, they can use Mailchimp, and but we'll make sure everything is payment-enabled. And then over time, if they want to use all of the invoicing capabilities, payroll capabilities access to capital, ensure that they're compliant, all of that will be enabled within Mailchimp. And then vice versa is true, if you're using QuickBooks and you want to start using capabilities to market your business manager customers, all of the capabilities of Mailchimp will be available to you Mailchimp could end up being for instance in our NAV.

On mail chimp, and I'm really disrupt the mid market. Because this is a huge need for mid market and I would say third is actually having a global playbook and investing accelerating our investments in and go to market, which I think will get at the last.

question that you asked but I didn't answer yet and that is we want customers to have a choice. So if customers first want to engage with Mailchimp to be able to take their business online to market their business and use CRM tools, they can use Mailchimp, and but we'll make sure everything is payment-enabled. And then over time, if they want to use all of the invoicing capabilities, payroll capabilities access to capital, ensure that

We want customers to have choice. So if customers first want to engage with mail chimp to be able to take their business online to market their business in your CRM tools, they can use Belgium, and but we'll make sure everything is payment enabled and then over time, if they want to use all of the invoicing capabilities payroll capabilities access to capital and Shaw.

they're compliant, all of that will be enabled within Mailchimp. And then vice versa is true, if you're using QuickBooks and you want to start using capabilities to market your business manager customers, all of the capabilities of Mailchimp will be available to you Mailchimp could end up being for instance in our NAV

And NAV item on the left-hand side. So we will let customers make choice is I think the headline answer to your question. We will go to market separately. We will go to market together, we will raise awareness and ensure that customers know that there's one place where they can run their business and more importantly, the power of all of their data will be in one place to fuel their success. So that's the approach that we're taking.

The fuel their success. So that's the approach that we're taking.

Alright, thank you so much. You're welcome. Thank you. Your next question comes from Sterling Auty of JPMorgan. Your line is open.

Youre welcome.

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

Great. Thanks, Craig its Greg Jackson on for Sterling tonight. Thanks for taking our questions. The first one is actually on the better than expected performance for the remainder of the year from Credit Karma and we're curious, is this I mean is it driven more by a stronger bounce back from an impact in 2020? In your traditional verticals or is it more about having increased confidence? Michele, and I think what you mentioned on the home and auto loans.

The first one is.

Actually on the better than expected performance for the remainder of the year from credit Karma and we're curious is this I mean is it driven more by a stronger bounce back from from an impact in 2020.

In your traditional verticals or is it more about having increased confidence? Michele, and I think what you mentioned on the home and auto loans.

Yeah. Thank you for the question. You know a couple of things I would start with you know last year when you look at the full year of Credit Karma compared to the prior year, we grew 37%. Our new guidance for Credit Karma going forward is a range of 35% to 37% and so I think what you see within that is there has been a macro bounce back. But really a lot of what we're really seeing is the innovation on the platform the power of Lightbox.

Start with you know last year when you look at the full year of credit Karma compared to the prior year, we grew 37%.

Our new guidance for credit Karma going forward is a range of 35% to 37% and so I think what you see within that is there there has been a macro bounce back but really a lot of what we're really seeing is the innovation on the platform the power of Lightbox.

The fact that members are getting better matches the things that they are looking for. Financial institutions and insurance companies are seeing the power of the platform and it's really just creating that network effect. So I think what we're gaining confidence in is just the innovation, the technology investments and in Lightbox and in context of the macro environment as we look ahead.

Financial institutions and insurance companies are seeing the power of the platform and it's really just creating that network effect. So I think what what we're what we're gaining confidence in is just the the innovation the technology investments and in light box and in context of the macro environment as we as we look ahead.

That gives us confidence around the performance of credit Karma. And again, I would just remind us and this is more of a longer term comment. Credit Karma is a platform and we're creating an ecosystem effect here, but you know Credit Karma is part of the TurboTax experience and we're excited for all of you to see what we're gonna be launching in the coming tax season. Turbotax is part of the Credit Karma experience, Credit Karma is part of the payroll experience to really think about intuit as one platform with you know many platforms, that's all different problems and that's really what fuels our confidence as we look ahead.

Gives us confidence around the performance of credit Karma and again I would just remind us. If this is more of a longer term comment.

Credit Karma as a platform and we're creating an ecosystem effect here, but you know credit Karma is part of the turbotax experience and we're excited for all of you to see what we're gonna be launching in the coming tax season Turbotax as part of the credit Karma experienced credit Karma is part of the payroll experience to really think about intuit as one platform with.

you know many platforms, that's all different problems and that's really what fuels our confidence as we look ahead.

Okay. Great and then a follow up actually on the tax business. By the end of the second quarter will kind of be into the tax season so this is we're coming up on marketing time on TurboTax advertisement spend. So any color that you can give us on kind of what the plans are for the marketing budget as we ramp up into January?

By the end of the second quarter will kind of be into the tax season to this is we're coming up on marketing time on turbotax advertisement spend so any color.

That you can give us on kind of what the plans are for the marketing budget as we ramp up into January.

Yeah, well I am not going to talk about the marketing budget, but what I will share with you is it's a very consistent and durable context on what you've seen in the last couple of years. You know we are very focused on really fundamentally changing how you get your taxes done if you need assistance. And you're going to continue to see us be assertive in terms of how we raise awareness with 88 million customers that need assistance, and how there's a better way to get your assistance. And also the underpenetrated segments that we've talked about which is like [Phoenix] the investment community and the cell phone place. What you should expect is our investments on our platform has continued in those areas, we're really excited about the season coming up and our marketing efforts will be really focused in those areas to continue to raise awareness.

Really fundamentally changing how you get your taxes done if you need assistance and Youre going to continue to see us be assertive in terms of how we raise awareness with.

88 million customers that need assistance, and how theres, a better way to get your assistance and also the underpenetrated segments that we've talked about which is like Phoenix the investment community and the.

The cell phone place I think you can.

What you should expect is our investments on our platform has continued in those areas, we're really excited about the season coming up and our marketing efforts will be really focused in those areas to continue to raise awareness.

<unk> continues in those areas, we're really excited about the season coming up and our marketing efforts will be really focused in those areas to continue to raise awareness.

Alright, great. Thank you. You're very welcome. Thank you, our next question comes from Siti Panigrahi of Mizuho. Your line is open.

Very welcome.

Thank you our next question comes from.

<unk> of Mizuho Your line is open.

Congratulations, great quarter. Sasan, I wanted to ask you about the new business, new customer acquisition trends that you're seeing I remember you talked about you know a lagging effect to it you know new business creation in the US. So wondering what sort of planning to you are seeing on the QuickBooks new customer acquisition side, and what sort of promotion or anything you are doing at this point.

I wanted to ask you about the new business.

New customer acquisition trends that you're seeing I remember you talked about you know a lagging effect to it you know new business creation and the U S. So wondering what sort of planning to you are seeing on the quickbooks, new customer acquisition side, and what sort of promotion or anything you are doing at this point.

Yeah. Thank you for your kind comments and the question. I would say that it's very consistent with what we talked to you all about at Investor Day and that is that you know we're continuing to see the acquisition trends that we would expect in the US are across the board both in the low end of the market. But also the trends that we're seeing in the midmarket, so those trends continue and as we've shared before we're not overly reliant by any means on new business formations. So from a health perspective, I would say US is consistent with what we talked about with all of you a few months ago. And I would say outside of the US, again, very consistent with before, the recovery has not been like the US. Now if I were to double click on that you know I would say behind the US has been Canada. And I think we're gonna start seeing UK and Australia start to come back sorry, UK and France.

No I would I would say that it's very consistent with what we talked to you all about at Investor day and that is that you know we're continuing to see the acquisition trends that we would expect in the U S are across the board both in the low end of the market, but also the trends that we're seeing.

In the Midmarket, so those trends continue and as we've shared before we're not overly reliant by any means on a new business formations. So from a health perspective, I would say U S is consistent with what we talked about with all of you a few months ago and I would say outside of the U S.

again, very consistent with before, the recovery has not been like the US. Now if I were to double click on that you know I would say behind the US has been Canada. And I think we're gonna start seeing UK and Australia start to come back sorry, UK and France.

And I think we're gonna start seeing U K and Australia start to come back sorry, U K in France.

And then Australia is I would say behind the UK and France. So we do believe that in the next year or less that international will start to slowly bounce back. And the reason for just the slowness in international bouncing back is there's just been so many starts and stops. It's no small businesses I've just lost confidence, do I build up inventory do I go hire more employees, do I increase my own marketing budget that they've just been slower and bouncing back, but we believe within the next year or so we'll see that strength. The headline news the US continues to be strong and match what we've expected in international as well will bounce back within a year.

In the UK and in France. So.

We do believe that in the next year.

Or less that international will start to slowly bounce back.

And the reason.

For just the slowness in international bouncing back is there's just been so many start and stops.

It's no small businesses I've just lost confidence why do I build up inventory do I go hire more employees do I increase my own marketing budget that they've just been slower and bouncing back, but we believe within the next year or so we'll see that strength, but.

The headline news the US continues to be strong and match what we've expected in international as well will bounce back within a year.

That's great and the follow up to Turbotax. This is probably the first area you are going to tap into the Credit Karma members who are not using TurboTax. What sort of strategy do you have at this point to tap into such a massive you know in our member base and Credit Karma?

What sort of strategy do you have at this point to tap into such a massive you know in our member base and credit Karma.

Yeah.

We are really excited about just the possibilities of what we can do of our members' credit Karma members and Turbotax customers and last year really was a learning year. And I think we're going to learn a lot more this year. You know listen our goal is we want every TurboTax customer to be using Credit Karma and all the benefits of Credit Karma. And we want every Credit Karma member to be using TurboTax, whether they want to do it themselves or they need our assistance and so I think we're gonna be one year better than we were last year in terms of all of our experiences, in terms of just the investments that we've made in the experiences and we're excited about it. But just to put it in context at Investor Day, we shared with you our horizon framework horizon one being you know sort of revenue impact within zero to 18 months. Horizon two being 18 to 36 months in horizon three being 36 months plus. We actually put the impact of credit Karma integrated it, as part of Turbotax and vice versa as almost three years out because we really wanted to nail the experience, but nevertheless, we're leaning in and we're excited about the things we're gonna be launching in the weeks to come.

Carmine we want every credit card member to be using turbotax, whether they want to do it themselves or.

they need our assistance and so I think we're gonna be one year better than we were last year in terms of all of our experiences, in terms of just the investments that we've made in the experiences and we're excited about it. But just to put it in context at Investor Day, we shared with you our horizon framework horizon one being you know sort of revenue impact within zero to 18 months. Horizon two being 18 to 36 months in horizon three being 36 months plus. We actually put the impact of credit Karma integrated it, as part of

We're excited about it but just to put it in context at Investor Day, we shared with you our horizon framework horizon, one being you know sort of revenue impact within zero to 18 months horizon, two being 18 to 36 months in horizon, three being 36 months, plus we actually put the impact of credit Karma integrated it.

Turbotax and vice versa as almost three years out because we really wanted to nail the experience, but nevertheless, we're leaning in and we're excited about the things we're gonna be launching in the weeks to come.

Thank you, Sasan. You're very welcome. Thank you. Our next question comes from Michael Turrin of Wells Fargo. Your line is open.

Yeah very welcome.

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

Yeah.

Hey, there thanks, and congrats on the amazing results to start off the fiscal year. We've talked about it I mean, you've got a few questions on tax. We see that on the life technology. We see are now offering expert setup for QuickBooks as well. I was wondering if you can just add any color on how far the expert with vision extends. Is that is that something you could take into consumer finance or potentially even something like email marketing with Mailchimp it seems like a powerful addition to the product portfolio and clearly a big that you've been focused on. So love to hear more, thank you.

We've talked about it I mean, you've gotten a few questions on tax we see that on the life technology. We see are now offering expert setup for quickbooks as well I was wondering if you can just add any color on how far the expert with vision extends is that is that something you could take into consumer finance or potentially even something like email marketing with mail chimp it seems like.

A powerful Ah.

Addition to the product portfolio and clearly a big that you've been focused on so love to hear more thank you.

Yeah, Michael. Thank you for your kind words, and great question, you know when we declared our bet around connecting people to experts and creating a virtual expert platform. I think we're onto now I don't know five-plus years, really investing in this virtual expert platform. You know there are so many underlying technologies services, where AI is being used to ensure that the platform matches the right customer to the right expert to make the platform simple and easy to use for experts. And we feel really confident relative to just where we are with the actual virtual expert platform and our focus intentionally has been really about serving customers when it comes to tax time. And helping small businesses with the bookkeeping and eventually also with their taxes, but more importantly, just helping them run their business.

Our bet around connecting people to experts and creating a virtual expert platform.

We have been I think were onto now I don't know five plus years are really investing in this virtual expert platform. You know there are so many underlying technologies services, where AI is being used to.

Ensure that the platform matches, the right customer to the right expert to make the platform simple and easy to use for experts and we feel really confident relative to just the where we are with the actual virtual expert platform and and our focus intentionally has been really about serving.

Customers when it comes to tax time and.

And helping small businesses with with the bookkeeping and eventually also with with their taxes, but more importantly, just helping them run their business and we.

And we have so much opportunity ahead of us just in that space. With that said, we do have a few what we call small mission-based teams that are exploring other spaces because we can leverage a lot of the capabilities of this virtual expert platform to serve spaces like marketing potentially you know spaces like financial services. So we are doing experiments, but very intentionally to ensure that we can learn. I think I will just end with the opportunities of where we can take this virtual electrical platform is endless.

Serve spaces like marketing potentially you know spaces like.

<unk> services. So we are doing experiments, but very intentionally to ensure that we can learn I think I will just end with.

The opportunities are where we can take this virtual electrical platform is endless.

However, the biggest growth opportunity ahead of us right now is helping customers with taxes and helping small businesses run their businesses. And then as these other verticals become reality will of course you know share our plans with our with all of you, but it is something that will extend overtime horizontally into new verticals.

Sure our plans with our with all of you, but it is something that will extend over time horizontally into new verticals.

It's a great answer, Michelle, you've historically not updated guidance before taxes. We've talked about some of the pockets of strength credit Karma, but in terms of breaking that historical pattern, are we just seeing a more diversified intuit come through or any comments you can provide just around the change there. Thank you.

We've talked about some of the pockets of strength credit Karma, but.

In terms of breaking that historical pattern or are we just seeing a more diversified intuit come through or any comments you can provide just around the change their thinking.

Yeah. Thanks, Michael. Yes. This is something that divergence from what we have done historically. You know historically also you know the consumer group has done such a large percentage of our business also. I'm now as we're adding you know other parts of the business are growing more we're adding Credit Karma and overall the composition of that business is just changing them, And also this is one of the first times, we've seen a real pandemic hit like this and so the growth factor of the pandemic has also had some implications for recovery and so forth. So yes. It is a little bit different composition of the company is a little different but we feel really good about what we're seeing and are very excited about the accelerated growth we're seeing in Credit Karma and in small business and ready to jump into tax season.

The composition of that business is just changing them and also you know this is one of them.

the first times, we've seen a real pandemic hit like this and so the growth factor of the pandemic has also had some implications for recovery and so forth. So yes. It is a little bit different composition of the company is a little different but we feel really good about what we're seeing and are very excited about the accelerated growth we're seeing in Credit Karma and in small business and ready to jump into tax season.

Accelerated growth, we're seeing in credit Karma and in small business and ready to jump into tax season.

Yeah.

Thank you. Our next question comes from Brad Zelnick of Deutsche Bank. Your line is open. Excellent. Thank you so much for taking the question and congrats, guys. My question. You had a price increase go into effect during the quarter in small business. Any discernible impact to retention across your various SKUs, particularly from those who have attach payments for payroll.

Excellent. Thank you so much for taking the question and congrats guys.

My question. You had a price increase go into effect during the quarter in small business. Any discernible impact to retention across your various SKUs, particularly from those who have attach payments for payroll.

In small business any discernible impact to retention across your various skus, particularly from those who have an attach payments for payroll.

Yeah, Brad. Thank you for your kind words and the question. You know I'll say two things. One, really the majority of our growth continues to come from customer growth and mix, a much lesser extent price. So you should just be aware of that. And two, there's nothing that we've seen from the price increase that's outside of the bounds of what we expected. So the short answer is no, it's within our control of it. As we expect that are based on the testing that we had done.

Thank you for your kind words and the question you know I would all.

I'll say two things one.

Really the majority of our growth continues to come from customer growth and mix.

Much lesser extent price. So you should just be aware of that.

And two, there's nothing that we've seen from the price increase that's outside of the bounds of what we expected. So the short answer is no, it's within our control of it. As we expect that are based on the testing that we had done.

We expect that are based on the testing that we had done.

Got it. And if I could just follow up with one more, Sasan, there's no doubt a significant opportunity with Credit Karma money. And I believe you called out the opportunity for Quickbooks payroll customers to deposit up to 232 billion of payroll funds into our CK money account. What traction have you seen on this so far or what percentage of Quickbooks payroll payees do you think you can ultimately capture with something like this?

Payroll funds into our CK money account what traction have you seen on this so far or what percentage of Quickbooks payroll piece do you think you can ultimately capture with something like this.

Yeah, you know the, first of all, we've not divulged or traction other than I would tell you we generally are excited as part of many things that we are providing in our portfolio to customers, giving them early access to wages. I think a lot of what we are learning and a lot of what we're excited about as we move forward, it depends on the customer in a cohort of customers. There are certain customers that, depending on their situation and how much they depend on, are connected to their weekly paycheck, if you live paycheck to paycheck you are much more focused on can I get early access to that versus if you don't live a week to week. So we're learning about those cohorts within our payroll to your question and where we can get traction and where it's just not a need for customers. I would just say more broadly, we are excited about early access to wages are both providing it across payroll standalone, providing it through Credit Karma. And frankly, I think over time. This is just something that's going to be commodity. I think everybody's going to have a product feature that gives you early access to wages for us it's not just about the feature it's about the ecosystem effect that it creates forour customers and our members.

Are excited as part of many things that we are providing in our portfolio to customers, giving them early access to wages I think a lot of what we are learning and a lot of what we're excited about as we move forward. It depends on the customer in a cohort of customers there are certain customers that.

Depending on their situation and how much they depend on a we're living a weekly.

Connected to their weekly paycheck if you.

Live paycheck to paycheck you are much more.

focused on can I get early access to that versus if you don't live a week to week. So we're learning about those cohorts within our payroll to your question and where we can get traction and where it's just not a need for customers. I would just say more broadly,

we are excited about early access to wages are both providing it across payroll standalone, providing it through Credit Karma. And frankly, I think over time. This is just something that's going to be commodity. I think everybody's going to have a product feature that gives you early access to wages for us it's not just about the feature it's about the ecosystem effect that it creates forour customers and our members.

A product feature that gives you early access to wages for us it's not just about the feature it's about the ecosystem effect that it creates for.

For our customers and our members.

Awesome. Thank you, Sasan.Thank you. Thank you. Our next question comes from Brent Thill of Jefferies. Your question. Please.

Thank you.

Thank you. Our next question comes from Brent Thill of Jefferies. Your question. Please.

[inaudible] when the Mailchimp deal close that this is not just the mail company, that there was a broader platform play for marketing and selling up a website. And I'm just curious along that theme you know what you're seeing in terms of the most excitement where you can bring Mailchimp into your clients and ultimately kind of this platform play for the front office. And how about that evolves if you could cover that, that'd be great.

This is not just the mail company that there was a broader platform play for Mark.

Marketing and selling up a website and I'm just curious along that theme you know what you're seeing in terms of the most excitement.

Where where you can bring.

Mail chimp into your clients and ultimately kind of this platform play for the front office.

How about that evolves if you could you could cover that that'd be great.

Yeah, absolutely, you know one of the things that we are one of our mechanisms that we have as a company is called or a big bet review where we take our officers of the company through the experiences of each of the big bets, what we've learned where we are and where we're headed. This last big that review happens to be one where we brought in a team from Mailchimp and actually walk through the experience in detail, where we are, you know on where we're going and I would just tell you that we continue to even get more excited.

You are aware, we take our officers of the company through the experiences of each of the big bat, what we've learned where we are and where we're headed in.

This last big that review happens to be one where we brought in a team from from mail chimp and actually walk through the experience in detail, where we are you know on where we're where we're going and I would just tell you that.

we continue to even get more excited.

As we close the deal because the needs of our customers are in all the areas that you mentioned. They are in every customer's in a different place, but customers are really looking for ways to be able to engage getting new customers, that's their bread and butter. Almost 70% of our customers are looking for ways to get new customers. We now have those capabilities and were integrated into Quickbooks and vice versa Quickbooks in the Mailchimp. They wanted to be able to manage their existing customers in an automated way you know in an insightful way where everything is automated they don't have to know when do I follow up with the customer, what additional products can I sell them? All that can get automated through Mailchimp. And one of the things people don't realize is you know one of the largest ways that you're still engaged customers. We do we see it through what we do in Turbotax is actually email. So now we have all those capabilities, we have abilities to put you on mega-platforms with all of our digital assets, manage all of your existing relationships all the email capabilities, but more importantly, it's leveraging the power of the data, the customer data and the purchase data to help you understand who is the customer, who bought what did they not buy who's leading your shopping cart and how do you pursue them.

engage getting new customers, that's their bread and butter. Almost 70% of our customers are looking for ways to get new customers. We now have those capabilities and were integrated into Quickbooks and vice versa Quickbooks in the Mailchimp. They wanted to be able to manage their existing customers in an automated way you know in an insightful way where everything is automated they don't have to know when do

I follow up with the customer, what additional products can I sell them? All that can get automated through Mailchimp. And one of the things people don't realize is you know one of the largest ways that you're still engaged customers. We do we see it through what we do in Turbotax is actually email. So now we have all those capabilities, we have abilities to put you on mega-platforms with all of our digital assets

manage all of your existing relationships all the email capabilities, but more importantly, it's leveraging the power of the data, the customer data and the purchase data to help you understand who is the customer, who bought what did they not buy who's leading your shopping cart and how do you pursue them.

It's consistent with what we've talked about before that's the opportunity ahead and that's about the work that we do now in the product to put the power of those capabilities in the hands of our customers. So we couldn't be more excited to help our customers with their success. So stay tuned.

Stay tuned.

Thank you. Our next question comes from Kartik Mehta of Northcoast research. Please go ahead.

Northcoast research. Please go ahead.

Hey, good afternoon and good evening. I wanted to ask you a little bit about TurboTax live maybe what the trends have been in terms of customers that are already Turbotax customers shifting to that product and new customers and how you anticipate that trend evolving this tax season.

This tax season.

Yeah, you know, it's a great question, it's one of the things that just really excites us about you know the lives on our platform. You know one, there's 88 million folks that are using an assisted method today within the assisted method you have 10 million folks every year where there's churn. They jumped from one assisted method to another.

Really excites us about the you know the lives on our platform you know one there's 88 million folks that are using an assisted method today within the assisted method you have 10 million folks every year, where theres churn they jumped from one assisted method to another.

So from one account to another or from one store to an accountant. And then within the Turbotax base to do it yourself, we have 4 million people that leave and they ultimately go to an assisted method. The answer to your question is it's all of the above, we've seen conversion improvements retention improvements we've seen TurboTax customers that did it themselves the year before where they had a life change.

The answer to your question is it's all of the above you know we've seen conversion improvements retention improvements we've seen turbotax customers that did it themselves. They are Europe before where they had a life change.

Or are they just weren't sure if their home deductions, the right way or if they had occurred and the kid went to college, how that ultimately account for those deductions, where they are now using the lives on our platform. And vice versa, you may use the life platform and have enough confidence with a year after you do it yourself and then you made an after that bounce back and now we're seeing you know three-four years of trend. So really it's all of the above.

Did their home deductions, the right way or if they had occurred and the Kid went to college, how that ultimately account for those deductions, where they are now using the the lives on our platform.

And and vice versa, you may use the life platform and have enough confidence with a year. After you do it yourself and then you made a after that bounce back and now we're seeing you know three four years of trend. So really it's all of the above.

The largest I would say driver being folks that use a different assisted method coming onto our platform. And of course, those that have life changes within TurboTax growing with TurboTax and using the life platform. And we just see that continuing as we view this opportunity with a 10-year lens.

And of course, those that have life changes within turbotax growing with turbotax and using the life platform and.

And we just see that continuing.

As we view this opportunity with a 10 year lens.

And just a question on critical Irma. You've talked about credit Karma money and that sounds like a very interesting opportunity I'm wondering is there any concern that your customers say, who you're competing with me now for deposits and that causes issues. You know one of the. Just sort of essential strategic principles that we have within credit Karma is that it is an agnostic platform.

You've talked about credit Karma money and that sounds like a very interesting opportunity I'm wondering is there any concern that your customers say, who you're competing with me now for deposits and that causes issues.

You know one of the.

Just sort of essential strategic principles that we have within credit Karma is that it is an agnostic platform.

And and our financial institutions of all of our partners see the power of that how diligent and intentional we are about not creating our own products, but ensuring that we match members with a product that's right for them and a lot of the capabilities that we have within credit Karma ultimately I had it ends.

Situtions that's participating in it so that is not a concern that we have you know all they do is a very very high with a with financial institutions and we just believe that that's the beginning of it, especially with the traction of Lightbox, which actually delivers more success for members and more success for financial institutions. So it is not a concern about.

Hours.

Perfect. Thank you so much appreciate it yeah, yeah, you're welcome.

Thank you. Our next question comes from Kash Rangan of.

Goldman Sachs. Your line is open.

It's very much a fantastic quarter.

And Michele.

I'm curious to get your take on the issues that are facing that are being faced by the U S. Economy's got unprecedented labor shortage got a supply chain issue got an inflation issue.

A lot of these problems do pertain to small the small business ecosystem or what do you think of Intuit and dramatic.

Transformation, you've undertaken very successfully but betting on AI.

What can intuit due to solve these problems for small business customers as a place to these near term headwinds that we're facing from your product perspective. Thank you so much.

Yeah Kash. Thank you one for your kind comments and it's a wonderful question on all of those areas right. The labor shortage some of the supply chain challenges, if you're a product based business and certainly our inflation.

Absolutely you know impacting small businesses I would make a broad comment that I would say we are experiencing when you couple.

What happened with the pandemic starting in March of 2020.

Where it really I think for everyone around the globe, whether you're a small business or not but let's stay focused on small businesses to reinvent yourself and it really accelerated the shift to virtual solutions that accelerated the shift going online whether it's how you invoice and get paid how you do your payroll how you do your time tracking and I think.

That movement, which is just simply continuing I don't think we're ever going to go back to the old way I think this pandemic really has accelerated.

The shift in those areas that I mentioned in particular that of course, the digital money offering I think that coupled with this not only labor shortage, but also labor movement from job to job some of the supply chain challenges that generally we believe as I talk to my peers will get start to get.

[noise] addressed by the second half of 2022.

First half of 2023, and inflation is actually causing small businesses to leverage more platforms and so if I then bring that back to our platform and the fact that.

If you use our platform you can get paid upfront you can get instant deposit you can do same day payroll.

You can use an expert to ensure that you've got the best deduction.

As a small business and to ensure that you're running your business effectively.

And the fact that you can do more with less people I see you used you know one platform, that's where the power of mail chip comes into play rather than having multiple tools, where you're bouncing back and forth between tools and you're not really sure.

What are your customer profitability is when you should follow up with the customer how to acquire more customers. All of those things are are through the use of our platform and our platform is actually built to help you grow your business.

With less focus on labor and to be able to embrace as much as possible. The inflation now ultimately we have to address over time and I believe it will get addressed some of these supply chain issues and inflationary issues, but that's where our platform comes into play and why we're so well positioned for small businesses and the role we need to play to continue to educate them.

Excellent. Thank you so much if I could very quick one for Michele how do you how do you assist of the long term margin drivers from generally the street thinks that margin growth is somewhat linear but generally these things.

Tend to go up in an S curve.

So we often underestimate the pool profitably for companies in the long term. So in your case what are the things that we should be looking for the good drive increased operating leverage in the future. Thank you so much and congrats.

Oh, Thank you Kash I appreciate that well in the current year.

As I spoke about earlier, we will see a margin adjustment with the acquisition of mail chimp and so we do believe that over time, we will continue to expand our margins as we've talked about from this new step down level I'm going forward, but you know as we become more and more of a platform we see.

Opportunities for us across the company, whether it is in technology and being able to increase the velocity of development on our platform and driving more services I'm using things like money movement across the company and our fraud and risk capabilities not having duplicate those.

The company or in customer success is another Great example, where we're scaling a common.

Customer success platform, so that we can more efficiently and effectively serve customers and then also when they go to market area and really leveraging a common infrastructure to be able to more effectively target and customers manage our sales and marketing processes also so we do see a number of opportunities.

All across the P&L that as we look forward there will be opportunities for us to leverage that.

Brilliant thank you.

Yeah.

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

Oh, great. Thanks, guys I'll Echo the congratulations on a real nice quarter I wanted to ask a question about turbotax, if I might please.

With this being the second year of your.

Targeting the full service opportunity what were the learnings from the <unk>.

Last year your first year with this offering and historically you've seen this 1% to 2% share gain within do it yourself do it yourself has gained two to four points as a category could this potentially accelerate those trends as you as you gain more intelligence become more successful with this effort.

And just generally what are your expectations for this year with that offering.

Yeah. Thank you Brad I, you know I would say to two big things.

One is <unk>.

We'll serve as absolutely has a halo impact on confidence for the customer.

Which actually gets me to the second point and really the approach which is.

We're a platform for our customers and so really if you think customer Mac, we want our customers to know that they have the ability to do it themselves.

They can access an expert if they need the expert to answer any questions that they have and or they can just have you ask do their taxes for them and do everything digitally and Oh by the way midstream if you choose an expert and utilize you know what I don't know if I just want help I just want intuit to do at all but for me we will do it all for you so really are.

Our approach and now that we've had several years of experimenting and learning with full service is that now we have a true end to end platform, where we can meet the needs of any customer and the power is actually grow with customers over time.

If they just start out there their career or if there are students who they have life changes.

We have a platform that will meet all their needs. So that that's really the I would tell you. The headlines of the answers plays a halo effect, which has informed our platform approach as we look ahead.

Great to hear sits on one more if I may please just on credit Karma last year, you saw a nice upside in the tax quarters of converting a turbotax filers to credit Karma could you remind us.

Where you are there was that some low hanging fruit initially.

What drove that that success that you saw in that business and kind of what is your outlook for that this year and going forward. Thank you.

Yeah sure you know I I would really put last year entirely in the bucket of just learning and it doesn't mean, that's going to change. This year. You know we are a company. That's all about moving fast experimenting pivoting and learning all in context of being stubborn around the vision that we have.

So really last year was a learning year, although there was some nice member growth impacts to credit Karma from turbotax.

We're really excited and eager to see how our new innovations and experiences on the on the platform.

Plays out this year and to see what we learn I'll take you back to the reason at Investor Day, we put the opportunity of credit Karma is part of the turbotax experience and turbotax as part of the credit Karma platform as a as a horizon. Three is we're really focused on the customer and member experience and nailing that because we know over time, we can.

So we're excited about the year ahead, what we have you know 11 months under our belt learning and adjusting and preparing for this tax season, and we're excited about these experiences being launched and see how they play out in the next couple of months.

Great to hear thanks Hassan.

You're welcome.

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

Thanks, very much good afternoon.

First question are in international is on 39% growth in small business.

It's.

Very nice could you just give a little summary of what you saw and where in the quarter and then kind of a part part B to the question is you mentioned the mail chimp will should accelerate global growth I'm, just curious when and how will we will see it showing up in the category.

Yeah sure Scott. Thank you first of all on international we saw some of the same trends.

Trends, given our not only our execution, but the macro environment as we've seen in the last couple of quarters, there's certain countries like Canada.

Canada had a bounce back a bit more strongly than Theres places like Australia.

That really had been very slow to bounce back based on the fact that the economy keeps opening and shutting down and again. Our view is you know within the next year International should that should start to come back from a macro perspective, so net net our trends and our performance. Although we're very pleased with that we believe over time.

<unk>.

Paint a different picture as the macro environment comes back you know in terms of a male channel. Our focus is the three priorities that I mentioned, we want to create an amazing product and platform that brings quickbooks or mail chimp together, we want to build the capabilities to go disrupt the mid market and then as Michel mentioned, we're gonna be investing heavily in our.

<unk> you know go to market. So you know I I would say I wouldn't overly anticipate a significant change in our trajectory international because of mail chimp, where there are some fundamental things we want to get right.

To ensure that we can truly be the platform that where you can grow your business and and run your business and overtime. It will certainly have an impact internationally and we're excited about that because that gives us another foot in the door outside of the U S.

Great. Thanks, and just a deferral last one now.

Graduations on the Intuit dome I'm, just curious and maybe beat no crypto dot com on that one, but ER, but just curious on the overriding big thematic marketing.

Push of the company. The last few years, just how should we think about that on the big scale. Thank you.

Yeah, you know I.

I would say and I've said this for for years and.

And I think you used to hear Brad talked about this I think we're the world's biggest hidden secret and we have we don't want that secret to hold true anymore. We we want to make sure the world knows who wouldn't do it is and what our brands are and we have data that shows that more customers learn that you know turbotax credit Karma.

Mail chimp now.

And quickbooks when they learned that they're part of the Intuit Brandenburg. The platforms are all connected it actually has a positive impact on our potential for growth. So the way, we think about Intuit dome. It is not for us a naming rights deal you know we've had many opportunities.

Well, we've actually been pursued to be part of deals like this and we passed them up over the years. We did this because we wanted to very technology forward I don't we're gonna be helping the community and two are really going to be able to showcase our brands and it will be yet another way.

To demonstrate the benefits that we bring to the market as one intuit platform and the impact that we can have in the lives of consumers and small businesses. So that's really how we think about it and why we're excited about it and by the way over time, we expect the same return on investment as we do with our marketing investments and that's really what this is.

It just goes beyond.

Marketing add to impacting the local communities in L. A which we're excited about.

Excellent. Thanks.

Youre welcome.

Thank you, ladies and gentlemen would you like to close with any additional remarks.

Yeah sure. Thank you well first of all really appreciate all the questions and once again I want to just thank our employees for.

There are incredible hard work, our customers and our partners for the strong start to the year and the opportunity. We have ahead of US we're very passionate about.

Fundamentally powering the prosperity of our customers and communities and we're proud of our accomplishments and our and we continue to believe that we are just getting started so thanks for your question. Thanks for your time and we will see.

See you at our earnings call Bye everybody.

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

Okay.

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Yes.

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Yes.

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Yes.

Yeah.

[music].

And good afternoon. My name is Lucy and I will be your conference facilitator at this time I would like to welcome everyone to into its first quarter of fiscal year 2022 conference call. All lines have been placed on mute to prevent any background noise.

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.

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

Thanks, Latif good afternoon, and welcome to into its first quarter fiscal 2022 conference call I'm here with Intuit CEO sits on good Archie M. Michel 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 her.

Expectations, you can learn more about these risks in the press release, we issued earlier this afternoon, our Form 10-K for fiscal 2021, and our other SEC filings all of those documents are available on the Investor Relations page of Intuit's website at Intuit Dot Com, we assume no obligation to update any forward looking.

Yes.

Some of the numbers in his 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 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, a copy of our prepared remarks and supplemental financial information will be available on our website. After this call ends with that I'll turn the call over to Sean.

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

We have nearly a 300 billion dollar addressable market driven by digital tailwind does that include a shift to virtual solutions.

Celebration to online and omnichannel capabilities and digital money offerings.

First quarter revenue grew 52%, including 32 points from the addition of credit Karma.

Total revenue growth was fueled by small business and self employed group revenue growth of 22%.

And credit Karma revenue of 418 million another record quarter.

Consumer group and pro connect group revenue was in line with our expectations in a seasonally small quarter.

As a result, both of our strong start to the year and the close of <unk> transaction, we are raising our revenue and non-GAAP operating income and earnings per share guidance for fiscal year 2020 to.

Michelle will cover this in detail later.

AI driven expert platform strategy is accelerating innovation in our five big bets are solving the largest problems our customers face with.

We continued to deliver strong proof points that demonstrate the success and are well positioned for durable growth in the future.

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

People to experts.

Unlock smart money decisions.

The center of small business growth and disrupt the small business mid market today.

Today I'd like to highlight examples of our recent progress across three of these big bets.

Our third big bet is to unlock smart money decisions I am extremely proud of the momentum we are seeing with credit Karma.

Credit Karma as a data platform with powerful network effects solving a two sided problem we.

We are focused on our goal of creating a personal financial assistant that helps consumers find the right financial products put more money in their pockets and access financial experts and insights.

Credit Karma achieved record high revenue again in Q1, we.

We continue to deliver innovation across all vertical is fueled by our proprietary like box platform, enabling personalized experiences for our members, creating a network effect.

Within the core partners usage of Lightbox reached all time highs across both credit card and personal loan.

Lightbox more than double the average approval rate for members, who apply for credit cards on credit karma versus outside of credit Karma.

Within the girls protocols, we're solving a larger set of financial challenges for consumers.

Comma drive is giving us members the opportunity to see if they can save money on auto insurance with usage based pricing.

We're actively exploring expansion opportunities with lightbox in other verticals, including auto loans building off of the successes, we've seen in credit cards and personal loans.

Within the emerging verticals, we remain focused on innovation with credit Karma money with.

We integrated credit Karma money into turbotax black season, and experimented with how we can best meet our customers' needs and announced an integration with quickbooks online payroll.

Given our learnings we are excited about launching our improved experiences in the coming tax season.

We believe credit Karma money is the key to driving growth and frequency of visits over time, one of the many T drivers of average revenue per monthly active user.

Over time, we're creating a virtual cycle, which we expect to increase the frequency of engagement transaction and monetization across our ecosystem.

Our fourth Big bet is to become the center of small business growth by helping our customers get customers get paid fast manage capital pay employees with confidence and grow in an omnichannel world.

60% of small business struggled with cash flow and we are continuing to innovate to create solutions for customers to overcome this challenge.

In fiscal year 2021, total payments volume on our platform grew 40% year over year to over 90 billion.

And online payments volume grew more than 60% driven by an increase in customers using our payments offering.

As we continue to innovate for our customers and payments those using quickbooks cash of nearly three times higher engagement compared to customers. We've just used quickbooks online.

Accelerating engagement and usage of our platform. We recently introduced get paid upfront a game changing innovation that will help qualified customers get paid soon after their invoices.

Our fifth Big bet is to disrupt the small business mid market with Quickbooks online advanced.

We're seeing strong traction with <unk> advance with customers growing to 118000 in fiscal year 2021 up 57% year over year.

As we continue to move upmarket and serve these customers more most critical needs. We're seeing our services ecosystem a P. C that it's four times higher than the IRR P. C for Q B O customers.

We're pleased with our results and remain confident in our game plan to win.

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

This will be further fueled by mail chimp.

I'm delighted that we closed mail chimp. They closed the acquisition earlier this month, which seeks to significantly accelerate two of our big bet.

It'd be the center of small business growth and to disrupt the small business mid market.

Getting an engaging customers remains a significant pain point for small and mid market businesses.

We are well on our way to becoming the source of truth for our customers to help them grow and run their business.

We have three acceleration priorities with mail chimp first priority is to deliver on our vision of an end to end customer growth platform to help customers get their business online market their business manage their customers' relationships get paid access capital pay employees manage cash flow and be compliant with <unk>.

Actual experts at their fingertips all in one place.

Second disrupting the mid market by developing a full marketing automation CRM and E Commerce suite for mid market customers at an attractive price point, enabling midmarket customers to use the power of the platform to grow their business and.

And third accelerating global growth with a holistic go to market approach.

With male chairman now part of the Intuit family, we are uniquely positioned to enable small and mid market businesses to combine their customer data from mail chimp and purchase data from quickbooks to deliver actionable insights they need to grow and run their businesses with confidence.

This is where the real magic happens our combined platform technology enables us to move with speed and we've already seen strong interest from our customers. The teams are hard at work and we are excited about the opportunity ahead.

Foundational to our company's success is building a high performance culture I.

I want to take a moment to acknowledge our progress with our diversity equity and inclusion efforts.

Last year, we declared our focus on increasing the percentages of women in technology roles and underrepresented minorities across our business we.

We achieved 30% and 13% respectively, and we are inspired to accelerate our plan and push even harder as much work remains to be done.

Additionally, we've made meaningful progress supporting our communities.

First we recently announced the Intuit climate action marketplace, which will help 1 million U S small businesses find sustainable solutions to reduce carbon emissions.

We also recently announced a 23 year partnership with the Los Angeles Clippers that includes economic benefits for the local community within two adult the team's future home.

And finally, we launched into adventures and best in the startup community and accelerate Fintech innovation for consumers and small businesses.

Thanks Hassan good afternoon, everyone and I'd also like to welcome them Mail chimp team too into it.

Now, let me turn to the results for the first quarter of fiscal 2022 we delivered revenue of $2 billion.

GAAP operating income of $195 million versus $209 million last year.

Non-GAAP operating income of $555 million versus $334 million last year.

GAAP diluted earnings per share of 82 cents versus 75 cents, a year ago and non-GAAP diluted earnings per share of $1 53.

94 cents last year.

Note that our GAAP results include a $39 million net gain on other long term investments.

Turning to the business segments, and the small business and self employed group revenue grew 22% during the quarter with online ecosystem revenue up 36%.

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 32% in fiscal Q1, driven mainly by customer growth higher effective prices and mix shift.

Second we continue to focus on connecting the ecosystem.

Online services revenue, which includes payroll payments capital and time tracking grew 42% in fiscal Q1.

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

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

Third our progress expanding globally added to the growth of online ecosystem revenue during fiscal Q1.

Total international online revenue grew 39% 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% organically over time.

This is driven by 10% to 20% expected growth in both customers and our P. C.

Desktop ecosystem revenue grew 7% in the first quarter cookbook.

Quickbooks desktop enterprise revenue grew high single digits, driven by strong customer growth and price increases we put in place late last year.

As a reminder, this fall we transitioned to a subscription model for this year's desktop offering, which we expect to be a headwind to revenue growth in the second half of the year.

We expect the desktop business to decline longer term.

Moving onto credit Karma revenue was $418 million in Q1, another record revenue quarter, driven by high levels of monthly active users and revenue per monthly active user.

Within the core we saw another record quarter, driven by the combined strength in personal loans and credit cards.

The growth verticals also achieved another strong quarter, reflecting momentum in home loans and auto loans.

And we're developing the emerging vertical by focusing on innovation with credit Karma money part of our digital money offering. So this is not a large revenue driver today.

We continue to expect pent up demand across our core verticals to taper sometime in the second half of fiscal 2022 after a strong year of investment by our partners.

We remain excited about the opportunities ahead.

Consumer group revenue of $120 million in Q1 was in line with our expectations.

[noise] ahead to the upcoming tax season, we continue to focus on our strategy to expand our lead in DIY and transform the assisted segment with Turbotax live.

As for the pro connect groups.

Of $26 million in the quarter. It was also in line with our expectations.

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

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

These principles guide our decisions and 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 $3 billion in cash and investments on our balance sheet.

November 1st we entered into a $4 $7 billion term loan under our new credit arrangement, our credit agreement to partially fund the mail chimp acquisition.

We repurchased $339 million of stock during the first quarter depend.

Depending 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 January 18, 2022. This represents a 15% increase versus last year.

Moving on to guidance.

Our updated fiscal 2022 guidance includes revenue of 12, 20 $165 billion to $12 $3 billion growth of 26% to 28%, including mail chimp as of November 1st and a full year of credit Karma, Excluding mail chimp revenue growth of 18% to 20%.

<unk> from our prior guidance of 15% to 16%.

GAAP earnings per share of $7 to $7.16 and non-GAAP earnings per share of $11 48 to $11 and 64 of them.

This updated fiscal 2022 guidance includes organic growth for the small business and self employed segment of 16% to 17% up from 12% to 14%.

Expected mail chimp revenue of $760 million to $770 million and credit Karma revenue of $1.54 billion to $1.565 billion up from $1.345 billion to $138 billion.

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

Excluding mail chimp, our non-GAAP operating income guidance continues to imply approximately 60 basis points of margin expansion in fiscal 2022.

Our guidance assumes the mail chimp transaction is accretive to Intuit non-GAAP earnings per share and full year fiscal 2022.

However, we expect an approximately 80 basis 0.1 time step down in non-GAAP operating margin, reflecting the impact of mail chimp as we plan to invest aggressively in the business.

We expect non-GAAP operating margin expansion to continue from this new level over time in line with our financial principles.

Our fiscal 2020 to GAAP operating income guidance includes approximately $165 million for stock based compensation associated with the acquisition of mail chimp.

In addition, our GAAP operating income guidance includes the impact of the credit Karma acquisition.

Along with investments, we are making in stock compensation to attract and retain talent.

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

And we expect our GAAP tax rate of 18% in fiscal 2022.

Our guidance for the second quarter of fiscal 2022 includes revenue growth of 73% to 74%.

GAAP earnings per share of 55 to 59 cents and non-GAAP earnings per share of $1 84 to $1 88.

You can find our full Q2 and updated fiscal 2022 guidance details in our press release and on our fact sheet.

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

Great. Thank you Michele we are off to a strong start this year with continued momentum across the company given our strategy of being an AI driven expert platform, that's powering prosperity for consumers and small businesses.

Yeah.

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 Ken Wong of Guggenheim. Your question. Please.

Great. Thank you so much a sign that the success of White box has been very impressive just wondering is there a way to quantify kind of where we are in terms of adoption of white box within your core credit protocol.

And kind of what the potential adoption could look like and then you touched on expanding into other verticals what verticals do you think.

Where appropriate.

To integrate into light Bucks.

Yeah, Ken Thanks for the question you know in terms of Lightbox.

As we talked about at Investor Day, we've actually made significant progress year over year in terms of penetration I think what we talked about at Investor Day, as you know, we had 50% and.

40% penetration in credit cards, and personal loans compared to I think 40 28, a year before so one we have significant penetration opportunity ahead of us I think equally as important if not more is what financial institutions are seeing which is really the pay off.

Are there investments and so more and more financial institutions are joining the platform and this gives us really an opportunity to significantly increase penetration I think that's the where I would.

We give you the punch line you know our penetration in credit cards is I think less than 5% I just as an example in personal loans and other verticals or even lower than that so you know light box. The trust, we build with our members that the trusts are building with our partners. It gives us an opportunity for a significant penetration and I think our sort of.

The best years are ahead of us when you think about but when you think about light box and particularly our penetration.

In terms of your question around expansion in auto loans is just one example of.

Where we can expand our light box and then there are other areas that we've not talked about publicly I won't do it today until we see a further proof points, where we can further expand our light box. So I think this is you know 13 years of investments that now positions us to really deliver for members partners and really create does not work in fact.

Got it fantastic I appreciate the color and then if I could sneak one in for you Michelle when I look at that mail chimp number of 760 770.

Any way to help us understand what that growth might have looked like in a sort of a three quarter basis versus versus last year.

Yeah.

Hi, Ken Yeah, and you know, we're really excited about mail channel and we think that you know we're gonna do some great things together their revenue and their new paying user growth was negatively impacted during the pandemic I would let you know that and they did pull back on some of their marketing spend.

And they can preserve their profitability and we did see their churn declined some there too yeah, we're gonna be investing aggressively to drive their growth as we go forward it wont happen overnight.

But we're really excited about the opportunities we see to grow as we look forward, we haven't really given any additional details on what their gross was previously.

Okay understood. Thank you very much Michelle.

Yeah.

Thank you. Our next question comes from Keith Weiss of Morgan Stanley. Your line is open.

Excellent. Thank you guys for taking the question and.

Really impressive quarter of across the board. It is there's really nothing to pick on in here I wanted to dig into the Quickbooks online business a little bit.

Both sort of the subscriptions and in the airline services both seen acceleration in the quarter can you help us understand how much of that is kind of like the continued kind of reflation post Ah the calendar 'twenty macro impacts and.

And how much comes from just fundamentally improving attach rates.

You guys are focusing on higher level customers with P. D. O advance is that starting to improve the overall attach rate picture in that business.

Yeah. Thanks for the question you know I would say the majority if not all compared to previous quarters is simply customer growth improved mix based on the traction of Quickbooks advanced Quickbooks live till.

To a lesser degree and you know things like full service payroll and just all the innovation, we've been doing in payments with instant deposit, making it easier to use our payments offering and now our new launch with you know get get paid upfront.

Say the majority of what we're starting to experience is the actual innovation on the platform and the portfolio that we have solving a broad range of.

Needs for our customers are you know that the I would say a bounce back from the pandemic of course happened and we started experiencing to pick up but that was I would say.

You know four to six months ago, I think now we're seeing the actual true performance of the platform.

And then maybe a follow up for Michelle you called out again, the potential impacts on the desktop business from a shift towards subscription anyway, you could help us quantify what those impacts are going to be.

Hi, what I can tell you about desktop as you know obviously, we saw the 7% growth in the ecosystem and and first quarter and that was really driven by two different components. The majority of it was two components first was you saw high.

Your desktop enterprise customer growth and some price increases.

Desktop enterprise revenue growth you know it was a high single digits in Q1, the other half of that is really the desktop subscriber mix.

Last year, what we saw was desktop subs grew 48% and outright units declined by 47% and so that growth in subs last year because of the way. We do revenue recognition. If you get an extra pop up revenue from subscriber growth in the in Q1, and so that is what we saw so we.

Do expect to see you know some headwind for that growth as we go further out through the rest of the year, especially with all the subscriber growth instead of outright.

Got it alright, thank you guys.

Thank you.

Thank you. Our next question comes from Kirk <unk> of Evercore ISI. Your line is open.

Hi, This is Robert on for Kirk Thanks for taking the question and congratulations on the great quarter.

It's still early days, but can you talk a little bit about the plan for the go to Moshe go to market with mail Chimp. For example are you planning to approach customers are the one stop shop vendor or do you think both will be sold separately given potential different buying centers and companies does Nielsen I forget your plans to potentially expand.

Books into more geographies on a quicker timeline and I guess, how do you expect that to evolve over time as we reach steady state. Thanks, so much.

Yeah. Thanks for the question you know I'll I'll take you back to the three priorities that we've declared I because I think it goes after the great question that you that you know first and foremost our number one priority is it really about around creating one growth platform and it's really a lot of the work behind the scenes in terms of the build.

<unk> data pipelines and connecting the services.

So that the magical power of the data both mail chimp data and Quickbooks data can come together for the customer.

To put the power of the insight in their hands. So first and foremost is all about the product and creating one growth platform. The second is we see a huge opportunity.

To serve mid market as you know, we're already doing that from a financial management solutions perspective with Quickbooks advanced.

Now, we're going to build out the capabilities on mail chat and I'd really disrupt the mid market. Because this is a huge need for mid market and I would say third is actually having a global playbook and investing accelerating our investments in and go to market, which I think will get at the last.

A question that you asked but I didn't answer yet and that is we.

We want customers to have choice so of customers first want to engage with mail chimp to be able to take their business online to market their business in your CRM tools, they can use Belgium, and but we'll make sure everything is payment enabled and then over time, if they want to use all of the invoicing capabilities payroll capabilities access to capital and sure.

That their compliance all of that will be enabled with the melt shop and the vice versa is true if you're using quickbooks and you want to start using capabilities to market your business and manage your customers all the capabilities of mail, Jim will be available to you mail chimp could end up being for instance in our NAV.

Another item on the on the left hand side. So we will let customers make choice is I think the headline answer to your question. We will go to market separately. We will go to market together, we will raise awareness and ensure that customers know that there's one place where they can run their business and more importantly, the power of all of their data will be in one place to the fuel.

Their success. So that's the approach that we're taking.

Alright, thank you so much.

Youre welcome.

Thank you. Our next question comes from Sterling Auty of J P. Morgan Your line is open.

Great. Thanks, Craig as Craig Jackson on for Sterling Tonight, Thanks for taking our questions.

The first one is.

In your traditional verticals or is it more about having increased confidence Michele and I think what you mentioned on the home and auto loans.

Yeah. Thank you for the question you know a couple of things I would.

Start with you know last year when you look at the full year of credit Karma compared to the prior year, we grew 37%.

And our new guidance for credit Karma going forward is a range of 35% to 37% and so I think what you see within that is there there has been a macro bounce back but really a lot of what we're really seeing is the innovation on the platform the power of Lightbox the.

The fact that members are getting better matches.

They are looking for a financial institution.

Institutions and insurance companies are seeing the power of the platform and it's really just creating that network effect, though I think what what we're what we're gaining confidence in is just the the innovation the technology investments and in light box and in context of the macro environment as we as we look ahead.

That gives us confidence around the performance of credit Karma and again I would just remind us. If this is more of a longer term comment.

Credit Karma as a platform and we're creating an ecosystem effect here, but you know credit Karma as a part of the turbotax experience and we're excited for all of you to see what we're gonna be launching in the coming tax season Turbotax as part of the credit Karma experience credit Karma is part of the payroll experience really speak about intuit as one platform with.

You know many platforms, that's all different problems and that's really what fuels our confidence as we look ahead.

Okay, Great and then a follow up actually on the tax business, but by the end of the second quarter will kind of be into the tax season to this is we're coming up on on marketing time on turbotax advertisement spend so any color.

That you can give us on kind of what plans are for the marketing budget as we ramp up into January.

Yeah, well I'm not going to talk about the marketing budget, but what I will share with you that it's very consistent and durable context on what you've seen in the last couple of years. You know we are very focused on.

Really fundamentally changing how you get your taxes done if you need assistance and Youre going to continue to see us be assertive in terms of how we raise awareness with with 88 million customers that need assistance and how there is a better way to get your assistance and also the underpenetrated segments that we've talked about which is Latina.

Ask the investment community and the.

The self employed I think you can.

What you should expect is our investments on our platform as.

<unk> continues in those areas, we're really excited about the season coming up and our marketing efforts will be really focused in those areas to continue to to raise awareness.

Alright, great. Thank you.

Very welcome.

Thank you our next question comes from.

<unk> of Mizuho Your line is open.

Congratulations great quarter.

I wanted to ask you about the new business I'm in new customer acquisition trends that Youre seeing I remember you talked about you know a lagging effect to it you know new business creation and the U S. So wondering what sort of plan that you are seeing on the quickbooks, new customer additions items whatsoever.

Promotion or anything you are doing at this point.

Yeah. Thank you for your kind comments and the question.

No I would I would say that it is very consistent with what we talked to you all about at Investor day and that is that we are we're continuing to see the acquisition trends that we would expect in the U S are across the board both in the low end of the market, but also the trends that we're seeing.

In the mid market. So those trends continue and as we've shared before we're not overly reliant by any means on a new business formations. So from a health perspective, I would say U S is consistent with what we talked about with all of you a few months ago and I would say outside of the U S.

Again, very consistent was with before the recovery has not been like the U S. Now if I were to double click on that.

Say behind the U S has been Canada.

And I think we're gonna start seeing U K and Australia start to come back I'm, sorry, U K in France.

And then Australia is I would say behind.

In the UK and in France, So are we.

We do believe that in the next year.

Year.

Or less that international will start to slowly bounce back.

And then the reason.

For just the slowness in international bouncing back is there's just been so many start and stops.

It's no small businesses have just lost confidence why do I buildup inventory do I go hire more employees you might incur.

<unk> my own the marketing budget that they've just been slower and bouncing back, but we believe within the next year or so we'll see that strength, but.

Not the headline news the U S continues to be strong and match, what we've expected and international will will bounce back within a year.

That's great and the follow up to Turbotax Christian This is probably the first area you are going to tap into their credit card. My members, who are not using turbotax do you see as a.

What sort of strategy do you have at this point to tap into such a massive you know our member base and credit Karma.

Yeah.

We are really excited about just the possibilities of what we can do for members credit Karma members in turbotax customers and last year really was.

A year and I think we're going to learn a lot more this year you know listen our goal is we want every turbotax customer to be using credit Karma and all the benefits of credit Karma. We want every credit card member to be using turbotax, whether they want to do it themselves or.

They need our assistance and so I think we're gonna be you know one year better than we were last year in terms of all of our experiences in terms of just the investments that we've made in the experiences and we're.

Turbotax and vice versa, as almost three years out because we really want to nail the experience, but nevertheless, we're leaning in and we're excited about the things we're gonna be launching and.

In the weeks to come.

Thank you Susan.

Very welcome.

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

Hey, there. Thank you and congrats on the amazing results to start off the fiscal year.

We've talked about it I mean, you've gotten a few questions on tax we see that on the life technology. We see you are now offering expert setup for quickbooks as well I was wondering if you can just add any color on how far. The expert was vision extends is that is that something you could take into consumer finance or potentially even something like email marketing with mail chimp it seems like.

A powerful addition to the product portfolio and clearly a big that you've been focused on so love to hear more thank you.

Yeah, Michael Thank you for your kind words, and and and Great question you know when we declared.

Our bet around connecting people to experts and creating a virtual expert platform.

We have been I think we're on to now I don't know five plus years are really investing in this virtual expert platform. You know there are so many underlying technology services, where AI is being used to.

Ensure that the platform matching the right customer to the right expert to make their platform simple and easy to use for for experts and we we feel really confident relative to just the where we are with the actual virtual expert platform and and our focus intentionally has been really about serving.

Customers when it comes to tax time.

And helping small businesses with with the bookkeeping and eventually also with with their taxes, but more importantly, just helping them run their business and.

We have so much opportunity ahead of us just in that space with that said, we do have a few what we call small mission based themes that are exploring other spaces, because we can leverage a lot of the capabilities of this virtual expert platform.

Serve spaces like marketing potentially you know spaces like Oh.

Financial services. So we are doing experiments, but very intentionally to ensure that we can learn I think I will just end with.

The opportunities are where we can take this virtual export platform is endless.

However, the biggest growth opportunity ahead of US right now is helping customers with taxes and helping small businesses run their business and then as these other verticals become reality will of course you know.

Share our plans with our with all of you, but it is something that will extend over time horizontally into new verticals.

That's a great answer Michelle you've historically not updated guidance before taxes.

We've talked about some of the pockets of strength credit Karma, but.

In terms of breaking that historical pattern or are we just seeing a more diversified intuit come through or any comments you can provide just around the change there. Thank you.

Yeah. Thanks, Michael Yes. This is something that divergence from what we have done historically you know historically also you know the consumer group has done such a large percentage of our business also I'm now as we're adding you know other parts of the business are growing more we're adding credit karma.

And overall the composition of that business is just changing.

And also you know this is one of them.

And one of the first times, we've seen a real pandemic hit like this and so the growth factor. The pandemic has also had some implications for you now recovery and so forth. So yes. It is a little bit different composition of the company is a little different but we feel really good about what we're seeing and are very excited about the ACA.

Salary of growth, we're seeing in credit Karma and in small business and ready to jump into tax season.

Thank you. Our next question comes from Brad Zelnick of Deutsche Bank. Your line is open.

Excellent. Thank you so much for taking the question and congrats guys. My question you had a price increase go into effect during the quarter in small business any discernible impact to retention across your various skus, particularly from from those who have an attach payments for payroll.

Yeah Brad.

Thank you for your kind words and the question you know I would.

I'll say two things one are.

Really the majority of our growth continues to come from customer growth and mix.

Much lesser extent price. So you should just be aware of that and.

And two there's nothing that we've seen from the price increase that's outside of the bounds of what we expected. So the short answer is no it's within within our control of it.

We expect that based on the testing that we had done.

Got it and if I could just follow up with one more sissonne theres no doubt a significant opportunity with credit Karma money and I believe you you called out the opportunity for Cuba, Quickbooks payroll customers to deposit up to 232 billion.

Payroll funds into our CK money account what traction have you seen on this so far or what percentage of Quickbooks payroll piece do you think you can ultimately capture with something like this.

Yeah, you know the first of all we've not divulged or traction other than I would tell you. We generally are.

As part of many things that we are providing in our portfolio to customers, giving them early access to wages I think a lot of what we are learning and a lot of what we're excited about as we move forward. It depends on the customer in a cohort of customers. You know there are certain customers that.

Depending on their situation and how much they depend on Oh, we're living in a weekly.

Connected to their weekly paycheck if you.

Paycheck to paycheck you are much more.

Focused on can I get early access to that versus if you don't live a week to week. So we're learning about those cohorts within our payroll to your question and where we can get traction and where it's just not a need for our customers I would just say more broadly.

We are excited about early access to wages, both providing it across payroll standalone, providing it through credit Karma and frankly I think over time. This is just something that's going to be commodity I think everybody's going to have.

At a product feature that gives you early access to wages for us it's not just about the feature it's about the ecosystem effect that it creates for our customers and our members.

Awesome. Thank you Susana.

Yeah. Thank you.

Thank you. Our next question comes from Brent Thill of Jefferies. Your question. Please.

Just on your clear when the mill chip a deal close that the this is not just the mail company that there was a broader platform play for.

Marketing and selling up a website and I am just curious along that theme.

What you're seeing in terms of the most excitement.

Where where you can bring.

I'll jump into your clients and ultimately kind of this platform play for the front office and how that evolves. If you could you could cover that that'd be great.

Yeah, absolutely Brent you know what.

One of the things that we are one of our mechanisms that we have as a company as it's called or a big bet, a review, where we take our officers of the company through the experiences of each of the big bat, what we've learned where we are and where we're headed in.

This last big that review happens to be one where we brought in banner the team from from mail Chimp and actually walk through the experience in detail, what where we are you know on where we're where we're going and I would just tell you that.

We continue to even get more excited.

Close the deal because the needs of our customers are in all the areas that you mentioned they are in every customer's in a different place, but customers are really looking for ways to be able to.

Engage getting new customers, that's their bread and butter almost 70% of our customers are looking for ways to get new customers. We now have those capabilities and we will integrate it into quickbooks and vice versa in the melt shop, they want to be able to manage their existing customers in an automated way you know in an insightful way where everything is automated they don't have to know when.

Do I follow up with a customer what additional products can I sell them all that can get automated through through mail channel and one of the things people don't realize is you know one of the largest ways that you're still engaged customers. We do we see it through what we do in Turbotax is actually you know so now we have all those capabilities, we have abilities to put you on mega platforms with all of our digital.

Laughs at manage all of your existing relationships all the email capabilities, but more importantly, it's the leveraging the power of the data the customer data and the purchase data to help you understand who is the customer who bought what what did they not buy who's leading your shopping cart and how do you pursue them. So you know, it's it's consistent with what we've talked about before.

That's the opportunity ahead, and that's about the work that we do now in the product to put the power of those capabilities in the hands of our customers. So we couldn't be more excited too to help our customers with their success so stay tuned.

Thank you. Our next question comes from Kartik Mehta of Northcoast Research. Please go ahead.

Hey, good afternoon or good evening. This is on we'd ask you a little bit about turbotax live maybe what the trends have been in terms of customers that are already turbotax customers shifting to that product and new customers and how you anticipate that trend.

I'll bring this tax season.

Yeah, you know, it's it's a it's a great question, it's one of the things that just.

Really excites us about the you know the lives on our platform you know one there's 88 million folks that are using an assisted method today.

Within the assisted method you have 10 million folks every year, whether its churn they jumped from one assisted methods to another.

So from one account to another or from one store to an accounting and then within the Turbotax base to do it Yourselfers, we have 4 million people that leave and they ultimately go to an assisted method.

Is that the answer to your question is it's all the above you know we've seen conversion improvements retention improvements we've seen turbotax customers that did it themselves. They are your before where they had a life change or they just werent sure if they.

Did their home deductions, the right way or if they had a kid and the Kid went to college, how that ultimately account for those deductions, where they are now using the the life a platform.

And and vice versa, you may use the life platform and have enough confidence with a year. After you do it yourself and then you made a after that bounce back and now we're seeing three or four years of trend. So really it's all the above with the largest I would say driver being folks that use a different assisted method coming onto our platform.

And of course, those that have life changes within turbotax growing with turbotax and using the life platform and.

And we just see that continuing.

As we view this opportunity with a 10 year lens.

And just a question on credit Karma.

You've talked about credit Karma money and that sounds like a very interesting opportunity I'm wondering is there any concern that your customers say, hey, you're competing with me now for deposits and that causes issues.

You know one of the.

And sort of essential strategic principles that we have within credit Karma is that it is an agnostic platform.

Situtions that's participating in it so that is not a concern that we have are they do is a very very high with with financial institutions and we just believe that that's the beginning of it especially with the traction of Lightbox.

Which actually delivers more success for members and more success for financial institutions. So it is not a concern of ours.

Perfect. Thank you so much appreciate it yeah, yeah, you're welcome.

Thank you. Our next question comes from Kash Rangan of.

Goldman Sachs. Your line is open.

It's very much a fantastic quarter.

And Michele.

I'm curious to get your take on the issues that are facing that are being faced by the U S. Economy's got unprecedented labor shortage and you've got the supply chain issue got an inflation issue.

A lot of these problems to pertain to small business small business ecosystem, where do you think of intuit and the dramatic.

Transformation, you've undertaken very successfully but betting on AI.

What can intuit due to solve these problems for small business customers as a place to be.

Near term headwinds that we're facing from your product perspective. Thank you so much.

Yeah Kash. Thank you one for your kind comments and it's a wonderful question and all of those areas right. The labor shortage some of the supply chain challenges, if you're a product based business and certainly our inflation.

He is absolutely impacting small businesses I would.

Make a broad comment that I would say we are experiencing when you couple.

What happened with the pandemic.

<unk> in March of 2020.

There it really I think for everyone around the globe, whether you're a small business or not but let's stay focused on small businesses to reinvent yourself and it really accelerated the shift to virtual solutions that accelerated the shift going online whether it's how you invoice and get paid how you do your payroll how you do your time tracking.

And I think that movement, which is just simply continuing I don't think we're ever going to go back to the old way I think this pandemic really has accelerated.

The shift.

And in those areas that I mentioned in particular that of course, the digital money offering I think that coupled with this.

Not only labor shortage, but also labor movement from job to job some of the supply chain challenges that generally we believe as I talk to my peers will get start to get addressed by the second half of 2022.

First half of 2023, and inflation is actually causing small businesses to leverage more platforms and so if I then bring that back to our platform and the fact that.

If you use our platform you can get paid upfront you can get instant deposit you can do same day payroll you can use an expert to ensure that you've got the best deduction.

As a small business and to ensure that you're running your business effectively.

What are your customer profitability is when you should fall off with the customer how to acquire more customers all of those things aren't or through the use of our platform and our platform is actually built to help you grow your business.

Excellent. Thank you so much for a very quick one for Michele how do you how do you assist or the long term margin drivers from generally the street thinks that margin growth is somewhat linear but generally these things.

Tend to go up in an S curve.

So we often underestimate the crude profitably for companies in the long term. So in your case what are the things that we should be looking forward that could drive increased operating leverage in the future. Thank you so much and congrats.

Oh, Thank you Kash I appreciate that well in the current year.

As I spoke about earlier and we will see a margin adjustment with the acquisition of male champions. So we do believe that over time, we will continue to expand our margins as we've talked about them from this new stuck down level I'm going forward, but you know as we become more and more of our platform we see.

What's the company or in customer success is another Great example, where we're scaling a common a customer success platform. So that we can more efficiently and effectively serve customers and then also when they go to market area and really leveraging a common infrastructure to be able to more effectively target.

Customers manage our sales and marketing processes also so we do see a number of opportunities all across the P&L that as we look forward there will be opportunities for us to leverage that.

Brilliant thank you.

Okay.

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

Oh, great. Thanks, guys I'll Echo the congratulations on a real nice quarter I wanted to ask a question about turbotax, if I might please.

With with this being the second year of your.

Targeting the full service opportunity what were the learnings from the last year. Your first year with this offering and historically you've seen this 1% to 2% share gain within do it yourself do it yourself has gained two to four points as a category could this potentially accelerate those trends as you as you gain more intelligence become more successful.

With this effort.

And just generally what are your expectations for this year with that offering.

Yeah. Thank you Brad I, you know I would say to two big things. One is a full service absolutely has a halo impact on confidence for the customer.

Which actually gets me to the second point and really the approach which is.

We're a platform for our customers and so really if you think customer Mac, we want our customers to know that they have the ability to do it themselves.

They can access an expert if they need the expert to answer any questions that they have.

And or they can just have you ask do their taxes for them and do everything digitally and Oh by the way midstream if you choose an expert and utilize you know what I don't know if I just want help I just want intuit to do it all that for me, we'll do it all for you. So really our approach and now that we've had several years of experimenting and learning with <unk>.

The service is that now we have a true end to end platform, where we can meet the needs are.

Any customer and the power is actually grow with customers over time.

If they just start out there their career or if there are students who they have life changes.

We have a platform that will meet all of their needs. So that's really that I would tell you. The headlines of the answers plays a halo effect, which has informed our platform approach as we look ahead.

Great to hear is to sign one more if I may. Please just on credit Karma last year, you saw a nice upside in the tax quarters of converting turbotax filers to credit Karma could you remind us kind.

Kind of where you are there was that some low hanging fruit initially.

What drove that that success that you saw in that business and kind of what is your outlook for that this year and going forward. Thank you.

Yeah sure you know I I would really put last year entirely in the bucket of just learning.

And it doesn't mean, that's going to change. This year. You know we are a company. That's all about moving fast experimenting pivoting and learning all in context I've been suffering around the vision that we have.

And so really last year was a learning year, although there were some nice member growth impacts to credit Karma from turbotax.

We're really excited and eager to see how our new innovations and experiences on the on the platform.

Plays out this year and to see what we learn I'll take you back to the reason at Investor Day, we put the opportunity of credit Karma is part of a turbotax experience in turbotax as part of the credit Karma platform as a as a horizon. Three is we're really focused on the customer and member experience and nailing that because we know over time, we can.

Great to hear thanks Hassan.

Youre welcome.

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

Thanks, very much good afternoon.

Question in international Suzanne 39% growth in small business.

It's.

Very nice could you just give a little summary of what you saw and where in the quarter and then kind of a part part B to the question is you mentioned mail chimp will should accelerate global growth and.

Just curious when and how will we will see it showing up in the category.

Yes sure Scott. Thank you you know first of all on international.

We saw some of the same.

Trends, given our not only our execution, but the macro environment as we've seen in the last couple of quarters, there's certain countries like Canada.

Canada had a bounce back a bit more strongly than Theres places like Australia.

That really had been very slow to bounce back be based on the fact that the economy keeps opening and shutting down and again our view is.

The next year International should should start to come back from a macro perspective, so net net our trends and our performance. Although we're very pleased with that we believe over time.

Paint a different picture as the macro environment comes back in terms of a male channel. Our focus is the three priorities that I mentioned, we want to create an amazing product and platform that brings quickbooks and mail chimp together, we want to build the capabilities to go disrupt the mid market and then as Michel mentioned, we're gonna be investing heavily in our glue.

Mobile you know go to market. So I would say yeah, I wouldn't overly anticipate a significant change in our trajectory international because of mail chimp was there some fundamental things we want to get right.

To ensure that we can truly be the platform of that where you can grow your business and and run your business and overtime.

We'll certainly have an impact internationally and we're excited about that because it gives us another foot in the door or outside of the U S.

Great. Thanks, and just a just for a last one now.

Graduations on the Intuit dome I'm, just curious and maybe beat no crypto dot com on that one, but ER, but just curious on the overriding big thematic marketing.

Push of the company. The last few years, just how should we think about that on the on the big scale. Thank you.

Yeah, you know I I would say and I've said this for for years.

And I think you used to hear Brad talked about this I think we're the world's biggest hidden secret.

And we we don't want that secret to hold true anymore. We we want to make sure the world knows who wouldn't do it is and what our brands are and we have data that shows that the more customers learn that.

Turbotax credit Karma mail chimp, now and Quickbooks when they learned that they were part of the Intuit brand in there or the platforms are all connected it actually has a positive impact on our potential for growth. So the way, we think about Intuit dome. It is not for us a naming right.

<unk> D.

You know we've had many opportunities where we've actually been pursued to be part of deals like this and we passed them up over the years. We did this because one its very technology forward dome, we're gonna be helping the community and two are really going to be able to showcase our our brands and it will be yet another way.

To demonstrate the benefits that we bring to the market as one intuit platform and the impact that we can have on the lives of consumers and small businesses. So that's really how we think about it and why we're excited about it and by the way overtime, we you know <unk>.

I expect the same return on investment as we do with our marketing investments and that's really what this is it just goes beyond.

Marketing out to impacting the local communities in L. A which we're excited about.

Excellent.

Youre welcome.

Thank you, ladies and gentlemen would you like to close with any additional remarks.

Yeah sure. Thank you well first of all really appreciate all the questions and once again I want to just thank our employees.

There are incredible hard work, our customers and our partners for the strong start to the year and the opportunity. We have ahead of US we're very passionate about.

Fundamentally powering the prosperity of our customers and communities and we're proud of our accomplishments and we.

We continue to believe that we are just getting started so thanks for your questions. Thanks for your time and we will.

See you at our next earnings call Bye everybody.

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

Q1 2022 Intuit Inc Earnings Call

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Intuit

Earnings