Q3 2023 Intuit Inc Earnings Call
Speaker 2: My name is Abby and I will be your conference facilitator. At this time, I would like to welcome everyone to Intuit's third quarter fiscal year 2023 conference call.
Speaker 2: All lines have been placed on mute to prevent any background noise.
Speaker 2: After the speaker's remarks, there will be a question-and-answer period.
Speaker 2: If you would like to ask a question during this time, simply press star then the number one on your telephone keypad.
Speaker 2: If you would like to withdraw your question, again, press star and the number one on your telephone keypad. With that, I'll now turn the call over to Kim Watkins, Intuit Vice President of Investor Relations. Ms. Watkins? Kim Watkins, Intuit Vice President of Investor Relations.
Speaker 2: Thanks Abby. Good afternoon and welcome to Intuit's third quarter fiscal 2023 conference call. I'm here with Intuit CEO Sisang Guderzi and Michelle Clatterbuck, our CFO . Before we start, I'd like to remind everyone that our remarks will include forward-looking statements.
Speaker 2: 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 our press release we issued earlier this afternoon, our Form 10-K for Fiscal 2022, and our other SEC filings.
Speaker 2: 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.
Speaker 2: Some of the numbers in these remarks are presented on a non-GAAP basis. We reconciled the comparable GAAP and non-GAAP numbers in today's press release.
Speaker 2: 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.personas.com
Speaker 2: A copy of our prepared remarks and supplemental financial information will be available on our website after this call ends. And with that, I'll turn the call over to Sipan.
Speaker 3: Great. Thank you, Kim, and thanks to all of you for joining us today. Third quarter revenue grew 7% lower than our expectations, reflecting a unique tax season while we exceeded operating income and earnings-for-share guidance.
Speaker 3: We continue to see strong growth in the small business and self-employed group, which grew 21% in the quarter. Our overall performance this year demonstrates the strength of our platform and portfolio, including our ability to maintain earnings power in uncertain times, while investing in the most important areas to drive long-term, durable growth.
Speaker 3: We are raising our total company fiscal year revenue, operating income, earnings per share guidance.
Speaker 3: I'm very proud of our team as we now expect revenue and operating income to grow double digits and margins to expand even more than previously guided.
Speaker 3: Let's turn to Pat.
Speaker 3: Well, this was a unique tax season. We're making good progress transforming the assisted segment with TurboTax Live.
Speaker 3: This year we expect overall IRS returns to decline 2% through July 31st below our original expectations for total returns to grow 1%.
Speaker 3: which was more in line with historical trends. We also expect the DIY category share of total IRS returns to decline nearly three-quarters of a point, also below our expectations.
Speaker 3: We believe the IRS and DIY category declines are driven by those who filed in order to receive pandemic-era stimulus and tax credits during the past several years, but did not file taxes this season.
Speaker 3: As a reminder, every point of IRS returns growth equals about one point of TurboTax revenue growth, and every point of DIY category share growth equals about two and a half points of TurboTax revenue growth.
Speaker 3: The expected decline in total IRS returns and DIY categories shape quite still approximately $200 million of negative impact or revenue for TurboTax versus our original expectations.
Speaker 3: We expect our share of total IRS returns to be down approximately 80 basis points this fiscal year, primarily reflecting pandemic era stimulus filers who did not file taxes this season.
Speaker 3: Each tax season has been unique since the pandemic began four years ago, although average annual trends over this period are far more in line with longer term trends.
Speaker 3: Over this four-year period, we expect total IRS returns to be up approximately 1%, the DIY category share of total returns to be up a quarter of a point, and our share of total returns to be up approximately 20 basis points.
Speaker 3: An average revenue per return to be up 9 points.
Speaker 3: These trends exclude users of the TurboTax free file offerings in prior year periods.
Speaker 3: Our strategy to transform the assisted category with TurboTax Live is working, given the growth we've experienced in an environment where IRS returns are declining.
Speaker 3: We expect TurboTax Live customers to grow 13% this year with TurboTax Live revenue up 19% and total average revenue per return to grow 12%.
Speaker 3: While TurboTax Live has driven strong growth over the last six tax seasons, we still have an immense opportunity to penetrate and transform the assisted tax segment at an accelerated rate. This remains our top priority as we prepare for next year. Turning to small business, while we're not immune to the macro environment, we're
Speaker 3: Our platform is resilient. Total online payment volume growth moderated 5 points from Q2, growing 20%.
Speaker 3: Despite this, the shift to digitization and the power of our small business platform resonate with customers as they look to grow their business and improve cash flow.
Speaker 3: We continue to see strength in the areas that have the greatest impact, including growth of our online mid-market customers.
Speaker 3: contributing to strong subscription revenue and higher ARPC.
Speaker 3: In Q3, growth in both the number of companies running online payroll and the number of employees paid on our platform remains strong.
Speaker 3: Our small business platform including QuickBooks and MailChimp remain critical to our customers' success.
Speaker 3: Let me now step back and talk about our company game plan to win.
Speaker 3: Four years ago, we declared our strategy to become the global AI-driven expert platform and five big messes as the primary areas of focus to drive durable growth. We invested heavily in our data and AI capabilities to deliver accelerated innovation.
Speaker 3: Today, we have over 100 million customers on our platform and use 400,000 customer and financial attributes per small business, and 55,000 tax and financial attributes per consumer to power 58 billion machine learning predictions per day. The acquisitions of Credit Karma and MailChimp each contributed a rich…
Speaker 3: which we believe will be the driver of our long-term growth.
Speaker 3: Our platform capabilities are key to continued acceleration across all of our five big bets.
Speaker 3: I'd like to highlight some examples of recent progress across these big bets. As a reminder, our big bets are revolutionized speed to benefit,
Speaker 3: Connect people to experts.
Speaker 3: unlock smart money decisions, be the center of small business growth, and disrupt the small business mid-market.
Speaker 3: Our first big bet is to revolutionize speed to benefit.
Speaker 3: This data and technology bet is foundational to everything that we do.
Speaker 3: We began investing in generative AI two years ago to accelerate our ability to fuel the success of consumers and small businesses.
Speaker 3: Implemented generative AI in MailChimp, powering the email content generator, enabling customers to create faster email campaigns based on industry, marketing intent, and brand voice.
Speaker 3: We deployed large language models which recognize, summarize, and generate text in our virtual expert platform to automatically summarize calls, reduce call times by hundreds of thousands of hours per year, and reduce work for experts while improving efficiency.
Speaker 3: Our strategic investment in data and AI over the last four years positions us to lead through this technological shift. I'm looking forward to sharing more in the coming months.
Speaker 3: With our third big bet, our vision is for Credit Karma to become a comprehensive, self-driving financial platform that propels our members forward wherever they are on their financial journey.
Speaker 3: We are focused on growing Credit Karma money, increasing member confidence to access financial products with Karma Guarantee, building out a richer experience for Prime members, and becoming the financial platform of choice for consumers with the seamless integration of Credit Karma and TurboTax.
Speaker 3: We're innovating across all verticals and can see that confidence in our long-term revenue growth expectation of 20 to 25 percent despite near-term headlines.
Speaker 3: I'll share a few examples. This season, we further streamlined the TurboTax final experience into the Credit Karma app, and the number of customers using the experience to file their taxes was over five times higher last year.
Speaker 3: With Credit Karma Money, we're innovating to help members get faster access to cash and make financial progress.
Speaker 3: This year we saw over 45% growth in the number of TurboTax online customers who received a refund advance in a Credit Karma Money account.
Speaker 3: This integration allowed approved members to get money in their hands in as little as one minute after the IRS accepted their return and drove increased debit card purchase activity contributing to more than 100% increase in credit card money revenue during the quarter.
Speaker 3: Members who use this offering show higher engagement on Credit Karma, which creates additional monetization opportunities over time.
Speaker 3: And with the Mint team now part of Credit Karma, we're building a new experience for members with prime credit scores where Credit Karma is under-penetrated today. During the quarter, we began rolling out Networx which helps prime members better understand their wealth. Our fourth big bet is to become the center of small business growth by helping our customers get new customers, get paid fast, manage capital, and pay employees with confidence in an omni-channel world.
Speaker 3: In payroll, our US 2BO payroll customers moved double digits this quarter, and the mix of online customers choosing our high-end offerings increased by over a point, driving higher ARPC.
Speaker 3: And in payments, we continue to innovate to drive digitization from creating an estimate to invoicing a customer to getting paid. Today, easier discovery, auto-enabled payments, instant deposits, and get paid up front are all helping drive adoption of our payments offerings, leading to 20% total online payments volume growth this quarter.
Speaker 3: We're making significant progress digitizing B2B payment.
Speaker 3: to accelerate and automate transactions between small businesses and ultimately improve their cash flow.
Speaker 3: We see a tremendous opportunity as 70% of B2B transactions are still completed with Chats. Following our launch of the QuickBooks Business Network to millions of our QBO customers in January , we are piloting our own native bill pay solution and launched the initial beta of this functionality in QuickBooks earlier this month.
Speaker 3: Turning to MailChimp, we're well on our way to becoming the source of truth for our customers to help them grow and run their business.
Speaker 3: We have three acceleration priorities with MailChimp. First, delivering on our vision of an end-to-end customer growth platform.
Speaker 3: Second, disrupting the mid-market by developing a full marketing automation, CRM, and e-commerce suite. And third, accelerating global growth with holistic go-to-market approach.
Speaker 3: This quarter will make great progress against these priorities.
Speaker 3: We're continuing to see better paid conversion, improving retention versus last order, and stronger paid customer growth.
Speaker 3: This, along with higher revenue per customer, drove several points acceleration in revenue growth versus last quarter.
Speaker 3: This along with higher revenue per customer drove several points of acceleration in revenue growth versus last quarter. Let me share some details around our progress.
Speaker 3: To help introduce new customers to Mailchimp and drive customer growth over time, we introduced three trials similar to what we offer in QBL. In early testing, this is already driving higher paid conversion and a mix shift into our higher end offerings.
Speaker 3: To drive stronger retention of mid-market customers, we continue to leverage our virtual expert platform to offer assisted onboarding, with the goal of guiding these customers to more advanced features and increasing awareness and usage.
Speaker 3: This quarter, we saw more than 7.8% increase in high value customers going through this onboarding process versus last quarter, which we expect to help drive stronger retention over time.
Speaker 3: To drive accelerated global growth and execute our refreshed international strategy, we're creating the process of multiple languages.
Speaker 3: Early results indicate this translation work is driving increased activation and ultimately can drive revenue growth.
Speaker 3: And our fifth big bet is to disrupt the small business mid-market, representing a TAM of 1.7 million customers, of which 700,000 are already in our franchise today.
Speaker 3: Online mid-market customer growth remains strong and we're driving ARPC expansion as we serve these mid-market customers across our full ecosystem of services.
Speaker 3: Wrapping up with our durable AI-driven expert platform strategy, we're innovating at a high velocity using the power of our platform, modern technology capabilities, data sets, and artificial intelligence to deliver new offerings at scale. This is helping us put more money in our customers' pockets, saving them time.
Speaker 3: and ensuring complete confidence in every financial decision they make. We're well positioned to power prosperity for the people and communities that we serve as we enter this next technological shift.
Speaker 3: ensuring complete confidence in every financial decision they make. We're well positioned to power prosperity for the people and communities that we serve as we enter this next technological shift. Now let me hand it over to Michelle.
Speaker 2: Thanks, Sasan. For the third quarter of fiscal 2023, we delivered revenue of $6 billion.
Speaker 2: Gap operating income of $2.8 billion versus $2.4 billion last year. Non-GAP operating income of $3.4 billion versus $2.9 billion last year.
Speaker 2: Gap diluted earnings per share of $7.38 versus $6.28 a year ago. Non-gap diluted earnings per share of $8.92 versus $7.65 last year.
Speaker 2: Turning to the business segment, consumer group revenue of $3.3 billion grew 3% in Q3.
Speaker 2: There are four primary drivers of our consumer business. This data reflects our expectations through July 31, 2023 versus the prior year through July 31, 2022.
Speaker 2: The first is the total number of returns filed with the IRS. We expect total returns to decline 2% this year. This is below our original expectations of up 1% as overall industry growth continues to reflect the multiyear impact from the pandemic.
Speaker 2: The second is the percentage of those returns filed using do-it-yourself software.
Speaker 2: We expect the DIY category of total IRS returns to be down nearly three-quarters of a point by the end of the fiscal year, below our original expectations.
Speaker 2: The third is our share. We expect our share of total IRS return to decline by approximately 80 basis points this fiscal year, primarily reflecting pandemic-era stimulus filers who did not file this season. As a result of these same industry dynamics, we expect our retention to decline this year.
Speaker 2: Before this average revenue per return, which we expect to increase 12% this year, as we expect TurboTax Live customers to grow 13% with TurboTax Live revenue up 19%.
Speaker 2: Historically, each point of total IRS returns growth corresponds to approximately a point of revenue growth for the consumer group. And each point of DIY category share growth corresponds to approximately two and a half points of revenue growth for the consumer group.
Speaker 2: Using these historical sensitivities, the expected decline in total IRS returns and DIY category share equates to an approximate $200 million negative impact to revenue for the consumer group versus our original expectations.
Speaker 2: As a result of this expected decline in IRS returns, we anticipate total customers to decline 5% this year.
Speaker 2: We expect TurboTax Online paying customers to decline 1% this year, and a total of over 11 million customers who pay us nothing, down from 13 million last year.
Speaker 2: We now expect full year consumer group revenue growth of 5 to 6 percent versus our prior guidance of 9 to 10 percent, reflecting the expected declines in IRS returns and DIY category share I mentioned earlier.
Speaker 2: Looking back over the last four years, including our updated guidance for this fiscal year, we expect our revenue to have grown over 10% on average annually, in line with our long-term expectations.
Speaker 2: We continue to anticipate consumer group revenue growth of 8 to 12 percent long term.
Speaker 2: Turning to the pro-tax group, revenue declined 5% in Q3. For the full year, we now expect pro-tax revenue growth of 2-3%.
Speaker 2: In the small business and self-employed group, revenue grew 21% during the quarter and online ecosystem revenue grew 23%. With the goal of being the source of truth for small businesses, our strategic focus within the small business and self-employed group is threefold. Grow the core, connect the ecosystem, and expand globally. First, we continue to focus on growing the core.
Speaker 2: QuickBooks online accounting revenue grew 25% in Q3, driven mainly by customer growth, higher effective prices, and mixed shifts. Second, we continue to focus on connecting the ecosystem.
Speaker 2: Online services revenue, which includes MailChimp, Payroll, Payments, Capital, and Time Tracking, grew 21% in Q3.
Speaker 2: Mailchimp revenue growth in the quarter accelerated several points from low teens growth last quarter. Growth was driven by higher effective prices and customer growth. Within payroll, revenue growth in the quarter reflects an increase in payroll customers and a mixed shift to higher-end offerings.
Speaker 2: Within payments, revenue growth reflects ongoing customer growth as more customers adopt our payment offerings to manage their cash flow and an increase in total payment volume per customer.
Speaker 2: Third, we continue to make progress expanding globally by executing our refreshed international strategy, which includes leading with MailChimp. On a constant currency basis, total international online ecosystem revenue grew 12% in Q3. Global top ecosystem revenue grew 16% in Q3.
Speaker 2: And, QuickBooks Desktop Enterprise revenue grew approximately 20%.
Speaker 2: We're just over halfway through a three-year transition to a subscription model for our desktop accounting solutions, making this revenue more predictable.
Speaker 2: We also raised our desktop prices for several products last September to price for value. Looking ahead, we expect continued strong desktop ecosystem revenue growth next quarter, and as we complete the remaining part of the three-year transition.
Speaker 2: We will continue to build out our online ecosystem and help our desktop customers migrate seamlessly to our online offerings when they're ready.
Speaker 2: We continue to expect the online ecosystem to be our growth catalyst longer term.
Speaker 2: As a result of the strong growth we're seeing in the small business and self-employed group, we are raising our full year segment revenue growth guidance to 24% from 19 to 20%.
Speaker 2: Credit Karma delivered revenue of $410 million in Q3, down 12%.
Speaker 2: As a reminder, Credit Karma represented 14% of our total revenue in fiscal 2022. On a product basis, the decline was driven primarily by headwinds in personal loans, home loans, auto loans, and auto insurance, partially offset by growth in Credit Karma money and credit cards.
Speaker 2: We're seeing more stability across our core verticals. In both credit cards and personal loans, we continued to see some partners tighten eligibility, while some expanded eligibility during the quarter.
Speaker 2: In personal loans, we continue to see partners facing funding constraints.
Speaker 2: We added more partners to the platform to help diversify our partner base. However, we continue to expect personal loan revenue to decline this year after very strong growth in fiscal 2022.
Speaker 2: We're updating our full year credit karma revenue growth guidance to a decline of 11% from a decline of 15% to 10%.
Speaker 2: Our financial principles guide our decisions, remain our long-term commitment, and are unchanged.
Speaker 2: We finished the quarter with approximately $4.3 billion in cash and investments and $6.6 billion in debt on our balance sheet.
Speaker 2: We repurchased $483 million of stock during the third quarter.
Speaker 2: Depending on market conditions and other factors, our aim is to be in the market each quarter. The Board approved a quarterly dividend of $0.78 per share payable July 18, 2023. This represents a 15% increase versus last year. As I've shared consistently in the past, we have an operating system we use to run moreefeated using weights on Ogden video again. The only difference is the amount of use our device1 can have at the end of the journey, which creates more of an impact on the growth of Plurals as a result of Eliovp election results. Thank you for watching this labour Monday,
Speaker 2: and control discretionary spend to deliver strong results, while investing in what is most important for future growth. The scale of our platform, along with our rich data, gives us the unique ability to see leading indicators that allow us to be forward looking and adjust quickly.
Speaker 2: I'm proud of the team for how effectively we have used our playbook to invest in the most important growth drivers to position Intuit for the future, while maintaining earnings power this year despite the macro impact we are experiencing. We will continue to accelerate our innovation, and our goal remains for Intuit to emerge from this period of macro uncertainty in a position of strength.
Speaker 2: Moving on to guidance, we are increasing our fiscal 2023 guidance. This includes total company revenue growth of 12 to 13%, up from prior guidance of 10 to 12% growth. This includes total company revenue growth of 12 to 13%, up from prior guidance of 12 to 13%.
Speaker 2: Gap operating income growth of 19 to 20 percent, up from prior guidance of 9 to 13 percent growth.
Speaker 2: non-GAAP operating income growth of 21%, up from prior guidance of 17 to 19% growth.
Speaker 2: Gap diluted earnings per share to grow 7 to 8%, up from prior guidance of a decline of approximately 5 to 1%.
Speaker 2: and non-GAAP diluted earnings per share growth of 20%, up from prior guidance of 15 to 17% growth.
Speaker 2: Our guidance for the fourth quarter of fiscal 2023 includes revenue growth of 9 to 10 percent.
Speaker 2: gap loss per share of $0.34 to $0.29, and non-gap earnings per share of $1.43 to $1.48.
Speaker 2: We expect a significant increase in our cash tax payments related to fiscal 2023 as a result of the tax law changes that require capitalization of certain R&D costs. With the recent IRS Disaster Area Tax Relief, we expect to pay approximately $700 million related to fiscal 2023.
Speaker 2: in Q1 of fiscal 2024.
Speaker 2: You can find our full fiscal 2023 and Q4 guidance details in our press release and on our fact sheet.
Speaker 3: And with that, I'll turn it back over to Sasan. Excellent. Thank you, Michelle. I know you'll be with us for another couple of months, but since this is your last earnings call, I wanted to express my sincere appreciation for all that you've been doing for the last 20 years.
Speaker 3: You have made me, my leadership team, and the entire company better, and I am forever grateful.
Speaker 3: Wrapping up, we feel confident in our AI-driven expert platform strategy and our five big bets. And in an uncertain macro...
Speaker 3: mission critical than ever to our customers.
Speaker 3: Let's now open it up to your questions.
Speaker 4: Thank you. Ladies and gentlemen, if you would like to ask a question, please press star and the number one on your telephone keypad.
Speaker 4: If you would like to withdraw your question, again, press star and the number one on your telephone keypad.
Speaker 4: Please limit yourself to one question. We'd like to get to as many people as we can.
Speaker 4: Your first question comes from the line of Brad Zelmik from Deutsche Bank. Your line is open.
Speaker 3: Great, thank you so much for taking the question. And Michelle, congrats on a phenomenal run. We will miss you next quarter for sure on the earnings call. I've got one for Sasan and maybe you'll let me sneak one in for Michelle, especially since it's her last call. Sasan, thank you so much for your time. I appreciate it. I appreciate it. I appreciate it. I appreciate it. I appreciate it. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you.
Speaker 3: how should we think about your big bet in helping customers overcome their lack of confidence by connecting them to live experts in a world where generative AI is advancing at breakneck speed? Because I think you spoke about how you're using generative AI to deliver the live platform but how is Intuit positioned in a world where LLMs may be able to deliver
Speaker 3: human-like guidance and interaction. And maybe for you, Michelle, your consumer segment operating margin was consistent with last year, despite the pressure on the top line for all the reasons that you've mentioned. Just curious how much visibility that you might have had into how tax would play out, and if you scaled back investment at all, perhaps even marketing dollars into the end of the season. Thanks so much.
Speaker 3: Great, Brett, thank you so much for your question. And I heard that I fell off when I was reading the last part of the script. So if I have bad connection, I will switch phones and hop back to make sure I answer your question. But let me start with the question that you asked. First of all Thina, first of all,
Speaker 3: I would take us back to what we declared four years ago. As you know, I've been on the record four plus years ago to say that I believe, and we believe as a company, that artificial intelligence is going to ignite global growth and I believe that it's the biggest thing next to.
Speaker 3: what we've experienced over time with electricity and the internet. It's that big and it's that critical of a platform of innovation, which is why data and AI have been core to our investments in the last four plus years. And with that as context, it's why we've been investing specifically in
Speaker 3: unsaid problem that customers have, which is around confidence, it is really about solving it by helping them feel confident in their decisions. And it doesn't necessarily always mean people. And in fact, if you look at our interactions today across all of our platforms,
Speaker 3: a large number of our interactions is actually our machines that are solving the customer's largest problem. The reason we are so excited about AI from four plus years ago is that you couple our data, which is a 360 view of the customer. It's actually where Credit Karma and Mailchimp have played such an important role to add to our rich data sets. You couple that with the investments in AI and now with generative AI.
Speaker 3: us the ability to do things that we could never imagine possible because of the data that we have. So for us, we saw this as an accelerant several years ago. It's why we accelerate our investments and it's why we're so excited about the future because of the large language models coupled with AI, coupled with machine learning and the investments that we've made. We believe that we can actually accelerate our innovation as we look ahead.
Speaker 2: And hopefully I was loud and clear. Yes, that was good. And Brad, first of all, thank you for the kind words. Your question around our ability to maintain the earnings power within CG really is a focus for us at the whole company, and it started last year.
Speaker 2: when we were going through our three- and one-year planning process. We assumed that there would be economic uncertainty this year, and so as we were going through the process, we made sure that we had funded those things that were most important to delivering for customers and being able to drive our revenue growth.
Speaker 2: And then we made lists of the levers that we had that we could pull as we went throughout the year to be able to maintain our earnings power. And those are some of the discretionary things we had, which were, you know, whether it's travel or advertising or, you know, moderating hiring.
Speaker 2: And so, you know, our lower tax units also this year did result in lower expenses for that segment, specifically in customer success. But really it's about us looking at maintaining not CG margins, but really at the company level. And it started last year in planning. So this is one thing.
Speaker 5: term consumer, you're going to have to reaccelerate the tax business. So we can go back to the basics from the old days. How does it do a plan to grow the category and how do you gain share of that category? That'll be great. And also as it tends to generate of AI, does this open up more opportunities netted against?
Speaker 5: maybe potentially new competitive entrants because there is a bear thesis, which I'm sure you will have a different view on, that it actually makes it easier to file for taxes. Brad was talking about that earlier. So does it expand the option, you said, at the same time attracting new competition? Or how do we think about how it nets out for you guys? Thank you. Yeah, thank you for the question, Kash. A couple of things I would...
Speaker 3: that came in to get access to their stimulus and to their tax credit. And those of, based on our analysis, have really all now left the category. One we believe will get to sort of a more normal environment. That is really what drove the performance, the lower performance than we expected this year. The second thing to get to your question around re-acceleration.
Speaker 3: This is where I feel very good about the performance in an environment where there were lower returns with our TurboTax live Business if you think about it, this is now a billion dollar plus business growing 19% and I believe in you know the next several years
Speaker 3: This will actually be the largest part of the TurboTax business and it's really in context of getting after the 30 billion dollars of TAM that is consumers that go to an assisted offering to get their taxes done or businesses that get their business tax done and we believe based on what we learned this year with our full service offer.
Speaker 3: next year, inclusive of the fact that we had five X to growth in the credit karma platform. We learned a number of things that we're going to double down on going into next year. And let me couple that with your second question around AI. You know, listen, I would say we, the ones four plus years ago that said, and we're on the record that we believe that.
Speaker 3: AI will absolutely be disruptive and is why we made investments in data. Because AI, particularly generative AI, is really meaningless without data. And so with the investments that we've made in having a 360 view of data for consumers and small businesses, AI is a very powerful tool.
Speaker 3: we actually see it as an incredible accelerant. And I'll just remind us of, you know, we often talk about we have $300 billion tab with 5% penetration. And most of our customers use Excel, Google Sheets, shoeboxes, whether it's a small business or a consumer, and manage their life to manage their business, or they go have a bookkeeper help them run their business.
Speaker 3: And the reason it's 5% because it all comes down to confidence. So we actually see our investments in the last four plus years in data and AI with what we are now investing in with generative AI, we for us think it's an acceleration because we have incredible scale. We have data scale, AI scale, customer scale.
Speaker 3: and we have sort of rich data sets that is really undisputed which means we can do things for customers that is hard for anybody else to do. So we actually see it as an accelerant and we are excited about the possibilities given the proof points that we've seen, and given the investments that we are currently making. So that's the way we think about it.
Speaker 3: Next question comes from the line of Kirk Matern from Evercore ISI. Your line is open. Yes, congrats, Sisan. Thanks for taking the question. Michelle, good luck on your next endeavor. I guess, Sisan, can you just talk about the state of the small business? There's a lot of debate on that right now. Obviously, you all had a nice quarter.
Speaker 6: and SBSE. Can you just talk about what you're seeing there in terms of the different verticals you play in and frankly the ability for you all to upsell some of your offerings like payroll payments. Thanks.
Speaker 3: Yeah, yeah, sure. Let me frame my answer in two dimensions. One, what we see across all small businesses on our platform and off of our platform. There's a couple of things that we see. One is there is an impact to small businesses' revenue. They're still growing. It depends on the sector, but in Azure what we see is that...
Speaker 3: more 10-year customers, 70% of those customers actually have more cash reserves than they did pre-pandemic. It's more the younger, newer businesses that have started since the pandemic that generally they have less cash reserves than they did... Part of the state of the small businesses, they feel like an impact and the pressure...
Speaker 3: of the environment from consumer spending standpoint. But NetNet, when you look in aggregate, they are still growing with some of the data points that I mentioned a moment ago. With that said, when we look at our platform, it's why we're just being, seeming to be intentional about sharing the proof points that we shared today.
Speaker 3: Our platform is not immune. We are resilient and so when you look at some of the data points that we shared You know our payments our total payments online payments volume 20% which is actually quite healthy, but it's down five points At the same time when we look at our overall performance across MailChimp and QuickBooks
Speaker 3: We actually are seeing strength in serving our mid-market customers and continuing to serve our customers that have been on the platform for a long time. The proof points that I shared was our customer growth in mid-market is strong. We're growing payroll, US payroll double digits, and we're actually seeing a migration to our higher-end payroll offering.
Speaker 3: At NetNet, we are not immune, but we are resilient, and we feel really good about the sustained growth that we've delivered and the trajectory of the KPIs that we see as we look into next year. Your next question comes from the line of Keith Weiss from Morgan Stanley .
Speaker 3: Your line is open. Excellent. Thank you for taking the question, guys. Michelle, it's been great working with you over the years. Congratulations on all the great work that you've done. So, Simon, a question for you on this.
Speaker 3: packs and kind of how unfolded throughout the season this season. I understand sort of overall filings down because of less people kind of getting the um the um refunds right and I understand DIY is probably a bigger component of it. I don't quite understand why Perbotax loses a share in that dynamic.
Speaker 3: What's the mechanism by which you guys get hit harder than others and therefore lose share? That's question number one. And question number two, there has been some concern about an extended tax season and the ability for approximately 10% of filers to be able to file.
Speaker 3: at a later date that pushes out of your fiscal year. You didn't mention that. Was there any significant impact from that side of the equation that some of this tax strength might just push into next fiscal year?
Speaker 3: Yeah sure, Keith, great question. Let me start with your share question. First and foremost, the majority of
Speaker 3: In fact, we would say close to all of those that came into the category of taxes to get access to their stimulus dollars and to their tax credits that were not tax filers before. Almost all of them came into the do it yourself category because it was so much easier and faster to get access to, in essence, all their credits.
Speaker 3: And those are the filers that we see that have left the do-it-yourself category. The reason our share is down is actually pure math. We're the largest share player in the do-it-yourself category. And we got the largest share of those folks that actually came in during the pandemic era. And when they left the category just by pure math.
Speaker 3: and the cohort of customers that we review in our retention, what we in essence see is those cohort of customers that came in that did not file taxes before to get access to credits are the ones that left, which is actually what gives us confidence when we look at our key retention cohorts looking ahead, but also our TurboTax live performance that we talked about earlier. So that's where, that's how to share.
Speaker 4: Your next question comes from the line of City of Penagrahi from Mizzou Hope. Your line is open. Your line is open.
Speaker 5: Thanks for taking my question and Ms. Ellev, great working with you. Good luck with your next endeavor. And Shashant, I want to dig into MailChimp. It's good to see that exploration to mid to high-tenth growth and MailChimp. So could you talk about like you made some changes how much of that contributed to growth versus what are you seeing in the demand environment?
Speaker 3: Thank you for the question. First of all, very consistent with what I've shared in the last probably 18 months or so, we felt and I felt very strongly that the opportunity that we had with Mailchimp is how we bring it together with what's truly great. One platform. steroidq.nettrain Luminar lifestyles
Speaker 3: that becomes the source of truth for running your business. And in an environment where now we have access to, with our customers' permission, the data applying AI and generative AI, we can now shift the platform to a place where we can do everything for you and deliver insights to help you manage your cash flow and help you grow your customers.
Speaker 3: And that's really the ultimate game changer that we are focused on. With that said, the thing that I've been very consistent with you all is that this is all about execution. So all of the progress that you're seeing us talk about in Mailchimp is all better execution. There's not any
Speaker 3: macro tailwinds. This is from the talents that we've put in place at the leadership level and the talents that we have upgraded across Mailchimp to then end to end. You know, we've been revamping the website. We have been looking at business model innovation in our lineup and we've made improvements. We're improving the product.
Speaker 3: We're doubling down on mid-market and not only getting our existing customers to understand what features and functionality that we have to deliver the benefit, which helps us with retention and expansion revenue, but also the new customers that we're getting, assisted onboarding and using a lot of our AI and virtual expert platform capabilities. So…
Speaker 3: Those were sort of illustrative examples relative to why we're seeing paid conversion increase, paid customers increase, we're seeing better retention and better revenue per customer. It is all execution and I expect this to continue to improve our execution and coupling that with what we're doing across the Christmas platform, truly creating one platform that becomes a source of truth for your business.
Speaker 7: Best wishes for sure. Um, it's just on I guess this could be a double tax question. Um, the IRS is down 1% year to date. You're saying down 2% through the end of July . Just curious, um, just what's what's going to take it down more in your eyes and how that looks in future years.
Speaker 7: you anticipate to be negative five and then revenue per return which you anticipate to be plus 12. Usually A plus B equals the the consumer segment revenue growth, but you have and that would be seven plus but you're guiding five to six so is there conservatism in there or is there?
Speaker 3: in the category. Thanks. Sure Scott. Let me take your first question. There are two assumptions that we are making based on all the data that we have and what we see from last year. One is there was actually a lot more extensions last year than we view will take place this year even with the states that have
Speaker 3: And so when we take out those filers and we compare to the extensions last year, our view is that IRA will be down too. And so that has, of course, an impact, 2%, which has an impact on the performance that we talked about. Secondarily, we really did an incredible amount of analysis to make sure that we had an understanding of.
Speaker 3: we guide will share with you what we've assumed in our guidance in August . But we would assume at a minimum it will be flat, maybe even up, but at a minimum flat based on the reasons that I just mentioned. So that's the first part of your question. The second part of your question is a really good one. I'll get to the...
Speaker 3: Specifics in a moment, I think this sort of reiterates even in an environment where IRS returns went down, our future is TurboTax Live and our future is the growth of what we can do with our live platform, especially with the data and AI capabilities. We have to really disrupt the assistance segment.
Speaker 3: And our real compass going forward is going to be the growth of our TurboTax Live platform, both in terms of customer growth and revenue growth. And I may just ask Michelle to weigh in on this, but this sort of comes down to just pure math in terms of when we look at our units and we look at what folks paid for it, which kind of adds up to the 12-point speed up in ARPC.
Speaker 3: It's really nothing beyond that. But let me just ask Michelle, would you weigh in on that point at all beyond what I just shared? Sorry, I'm having trouble with the mute button there. No, Sison, some of it can just be also routing with units and returns. And so I wouldn't get overly concerned on that. Scott? Thanks, to my friends, Michelle, for being standing here.
Speaker 3: So the headline is the 12 points in ARPC growth is very tangible relative to the units that we got. Yes, you got the 12 points of ARPC and then as you said Scott, we shared we expect the units to be down 5%. Yes, we got the 12 points of ARPC growth is very tangible relative to the units that we got. Yes, we got the 12 points of ARPC growth is very tangible relative to the units that we got.
Speaker 3: Your next question comes from the line of Daniel Jester from BMO Capital Market. Your line is open. Great. Thanks for taking my question. A couple more on tax. I think you mentioned before that overall retention because of the factors you mentioned on the call already is going to be down this year.
Speaker 3: But can you focus in on just live retention, given how important that's going to be for the future of the platform? How did that shake out this year? And if you could share in terms of live customer growth, are you getting more takeaways from competitors or is this DIY customers trading up to live? Any color you could provide there would be helpful. Thank you. Yeah, sure, Daniel. First of all, yes, you're right. Thanks for having me.
Speaker 3: what you heard us say earlier, which is we would expect retention to be down a point plus, and we'll talk about it of course more than yesterday. And it's really because of the pandemic era filers that came in and have now left the category. Overall, we like the mix of what we've seen across our live platform.
Speaker 3: of both those that did taxes themselves the prior year, that ultimately chose to upgrade to a sort of a live platform because something changed in their life, inclusive of getting customers that were prior year assisted. And remember, our, really our competition.
Speaker 3: is those that go to mom and pop shops. It's the 88 million folks where the majority of them will ultimately go to a local mom and pop shop to get their taxes done, and that's where we get a lot of the switchers also from those mom and pop shops. So we have a good mix of retention, those that did taxes themselves last year and chose to use the live platform because of a confidence question, risk, and concern, and then getting...
Speaker 4: Your next question comes from the line of Primo Lynchau from Barclays. Your line is open.
Speaker 8: Thank you. Thanks for squeezing me in. One question on credit karma. You kind of raised the guidance there and that came after a quarter where we had a lot of turmoil in the financial services industry with the regional banks, et cetera. Can you talk a little bit about what you saw this quarter in terms of the extra headwinds that obviously played out there but you actually doing.
Speaker 3: better than what you had guided previously? Thank you. We're actually continuing to see strength based on our innovation in a couple of areas. One is in cards, in some parts driven by our karma guarantee which is really unique to Credit Karma where the certainty is very high for a member to get approved for what they are looking for because of the data and AI capabilities that we have. The second is Credit Karma money and this is where...
Speaker 3: As I always have shared, we are building a consumer platform to be the destination for consumers with the integrations that we're doing with TurboTax and Credit Karma. And in essence, we saw a 45% increase in the number of TurboTax customers that chose to put their money on a Credit Karma money account. And not only do we make some revenue from that, but over time we'veAdditional thing
Speaker 3: based on the higher frequency of engagement, we can ultimately monetize even further, which we are not in the numbers that I just mentioned. So really, it's across our innovation, across cards and credit karma money, that's why we saw the performance that we saw in the quarter. And then with one quarter less than the year, we of course have confidence to improve the guidance that we provided to what Michelle shared earlier. Your next question comes from the line of Jackson Ader from Moffitt Nationson. Your line is open.
Speaker 3: Great. Thanks for taking our questions, guys. We saw the press release related to the IRS direct filing program, but I just thought maybe Sasan, if we could hear what you're thinking are maybe the largest potential threats of that study that came out as part of the Inflation Reduction Act last year.
Speaker 3: Yeah, sure. Thank you for the question. I'll share a couple of perspectives that is really consistent with what we've talked about, but this is probably an important time to reiterate how we think about it. First and foremost, I can't vouch for their study. I can simply vouch for the facts that we have and the facts that are already in the media.
Speaker 3: free tax software in the marketplace. And I would just say, if you look at the last, you know, four plus years, there were several inference, big inference, uh, into the free tax software. One was credit karma before we acquired them where you know, they have a hundred million plus customers, a trusted platform.
Speaker 3: They entered into the market of providing free tax software with sort of very little to no impact and then another you know very large player that we sold credit karma tax to when we acquired credit karma and And you can of course observe what their results are the point is that?
Speaker 3: Free tax software is already available, has been available to every consumer and the awareness is extremely high. And so to have another sort of free tax software that's available is really immaterial is the way we think about it. And I'll remind us by the way, it's actually not free. This is going to cost taxpayers billions of dollars.
Speaker 3: And so it's really not free. And I think that last thing I would say is really back to our vision. Our vision has been from what we declared four years ago to really become a consumer platform of choice, which means that beyond serving you to help you get your taxes done.
Speaker 3: We're delivering benefits through Credit Karma Beyond Tax, which means we can monetize Beyond Tax. And really out of the $35 billion camp in tax, less than $5 billion is do it yourself. And really our biggest opportunity is the other $30 billion we're going after, 20 of it being, $20 billion of it being consumers that have somebody else give their tax.
Speaker 4: Your next question comes from the line of Brad Bills from Bank of America. Your line is open. Your line is open.
Speaker 6: Great, thank you so much. I wanted to ask a question around the TurboTax ARPU number, such a nice increase that you're expecting this year at 12%. Could you help unpack that a little bit for us, please? Obviously, TurboTax Live was a key driver there. I guess two questions, were there other contributors here, Premium Mix Shift or other items perhaps? And then also on TT Live, what would you attribute the strength to? We've seen the ads, this is not our Corsair, so capital J, weCallibleEnglish, weCallable Equity, because theseFi numbers
Speaker 3: increase, on top of ARPU increases in the last several years, has come from TurboTaxLive. It is a disruptive price offering. At the same time, it's got much higher ARPU and some of the more premium customers that chose, they're either self-employed or they're investors and of course chose are.
Speaker 3: our premium SKU which has a higher ARPU. So those are a couple of big drivers. I would tell you that the thing that I am sort of most excited about were the insights and the learnings that we got this year that really informs what we're gonna double down on right now as we prepare for next year. One is full service, full service.
Speaker 3: is an outlet offering that has product market fit, it's at scale. We got an 84 net promoter score this year, which is the highest net promoter of anything across the company we have ever had. And you've heard me say before around Credit Karma, well, this is even a higher net promoter. And that contributed to a small amount this year because we were really being thoughtful and careful about ticks.
Speaker 3: both our AI and generative AI capabilities and or human, depending on the need of the customer, engaging around the money experience, helping customers understand their refund, changes in their refund or their balance due and changes in their balance due. We learned, coupled with our go-to-market strategy, how to really nail that benefit. And that's what drove the growth.
Speaker 4: Would you like to close with any additional remarks?
Speaker 3: Yes, just to say thank you for all your great questions and many thanks to our employees and customers for their amazing focus and being part of the community.
Speaker 3: in this storied franchise and we look forward to seeing all of you at next earnings. Thank you, everybody. Ladies and gentlemen, thank you for participating. This concludes today's conference call.
Speaker 1: I.
Speaker 1: Oh.
Speaker 1: I.
Speaker 1: The and.
Speaker 4: conference call. All lines have been placed on mute to prevent any background noise.
Speaker 4: 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, again, press star then the number one on your telephone keypad. With that, I'll now turn the call over to Kim Watkins.
Speaker 4: Intuit Vice President of Investor Relations, Ms. Watkins. Thanks Abby. Good afternoon and welcome to Intuit's third quarter fiscal 2023 conference call. I'm here with Intuit CEO , Sisang Gidarzi and Michelle Clatterbuck, our CFO .
Speaker 4: 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. Please stay tuned until the end of the video for another version of this silent talk.
Speaker 4: You can learn more about these risks in our press release we issued earlier this afternoon, our Form 10-K for Fiscal 2022, and our other SEC filings.
Speaker 4: 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.
Speaker 4: Some of the numbers in these remarks are presented on a non-GAAP basis. We reconciled the comparable GAAP and non-GAAP numbers in today's press release.
Speaker 4: 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. And with that, I'll turn the call over to Supan.
Speaker 3: Great, thank you, Kim, and thanks to all of you for joining us today. Third quarter revenue grew 7% lower than our expectations, reflecting a unique tax season, while we exceeded operating income and earnings-for-share guidance. We continue to see strong growth in the small business and self-employed group, which grew 21% in the quarter. Our overall performance this year demonstrates the strength of our platform and portfolio and our overall performance this year demonstrates the strength of our platform and portfolio.
Speaker 3: including our ability to maintain earnings power in uncertain times, while investing in the most important areas to drive long-term, durable growth. We are raising our total company fiscal year revenue, operating income, earnings to share guidance.
Speaker 3: I'm very proud of our team as we now expect revenue and operating income to grow double digits and margins to expand even more than previously guided. Let's turn to tax. While this was a unique tax season, we're making good progress transforming the assisted segment with TurboTax Live. This year, we expect overall IRS returns to decline 2% through July 31st.
Speaker 3: below our original expectations for total returns to grow 1%, which was more in line with historical trends. We also expect the DIY category share of total IRS returns to decline nearly 3 quarters of a point, also below our expectations.
Speaker 3: We believe the IRS and DIY category declines are driven by those who filed in order to receive pandemic-era stimulus and tax credits during the past several years, but did not file taxes this season.
Speaker 3: As a reminder, every point of IRS returns growth equals about one point of TurboTax revenue growth, and every point of DIY category share growth equals about two and a half points of TurboTax revenue growth.
Speaker 3: The expected decline in total IRS returns and DIY categories shaped the quite so approximately $200 million of negative impact to revenue for TurboTax versus our original expectations.
Speaker 3: We expect our share of total IRS returns to be down approximately 80 basis points this fiscal year, primarily reflecting pandemic era stimulus filers who did not file taxes this season.
Speaker 3: Each tax season has been unique since the pandemic began four years ago, although average annual trends over this period are far more in line with longer-term trends. Over this four-year period, we expect total IRS returns to be up approximately 1%. The DIY category share of total returns to be up a quarter of a point.
Speaker 3: and our share of total returns to be up approximately 20 basis points, and average revenue per return to be up 9 points.
Speaker 3: These trends exclude users of the TurboTax free file offerings in prior year periods. Our strategy to transform the assisted category with TurboTax Live is working given the growth we've experienced in an environment where IRS returns are declining. We expect TurboTax Live customers to grow 13% this year with TurboTax Live revenue up 19% and total average revenue per return to grow 12%. TurboTax Live has driven...
Speaker 3: strong growth over the last six tax seasons, we still have an immense opportunity to penetrate and transform the assisted tax segment at an accelerated rate. This remains our top priority as we prepare for next year. Turning to small business, while we're not immune to the macro environment, our platform is resilient.
Speaker 3: Total online payment volume growth moderated five points from Q2, growing 20%. Despite this, the shift to digitization and the power of our small business platform resonate with customers as they look to grow their business and improve cash flow.
Speaker 3: We continue to see strength in the areas that have the greatest impact, including growth of our online mid-market customers, contributing to strong subscription revenue and higher ARPC.
Speaker 3: In Q3, growth in both the number of companies running online payroll and the number of employees paid on our platform remains strong. Our small business platforms including QuickBooks and Mailchimp remain critical to our customer's success.
Speaker 3: Let me now step back and talk about our company game plan to win. Four years ago, we declared our strategy to become the global AI driven expert platform and five big messes the primary areas of focus to drive durable growth. We invested heavily in our data and AI capabilities to deliver accelerated innovation. Today, we have over 100 million customers on our platform.
Speaker 3: and use 400,000 customer and financial attributes per small business, and 55,000 tax and financial attributes per consumer to power 58 billion machine learning predictions per day. The acquisitions of Credit Karma and Mailchimp each contributed a rich and additive data set which helped deliver a 360-degree view of our customers.
Speaker 3: The scale of our data is an important competitive advantage and building block for our existing and future innovations with AI. We are accelerating reimagining our customer experiences with generative AI capabilities which we believe will be the driver of our long-term growth.
Speaker 3: Our platform capabilities are key to continued acceleration across all of our 5 big bets. I'd like to highlight some examples of recent progress across these big bets. As a reminder, our big bets are revolutionize speed to benefit, connect people to experts, unlock smart money decisions, and make a difference.
Speaker 3: be the center of small business growth, and disrupt the small business mid-market. Our first big bet is to revolutionize speed to benefit. This data and technology bet is foundational to everything that we do. We began investing in generative AI two years ago to accelerate our ability to fuel the success of consumers and small businesses. We implemented generative AI in MailChimp powering the email content
Speaker 3: improving efficiency. Our strategic investment in data and AI over the last four years positions us to lead through this technological shift, and we look forward to sharing more in the coming months. With our third big bet, our vision is for Credit Karma to become a comprehensive, self-driving financial platform that propels our members forward wherever they are on their financial journey.
Speaker 3: We are focused on growing Credit Karma money, increasing member confidence to access financial products with Karma Guarantee, building out a richer experience for Prime members, and becoming the financial platform of choice for consumers with the seamless integration of Credit Karma and TurboTax.
Speaker 3: We're innovating across all verticals and can see that confidence in our long-term revenue growth expectation of 20 to 25%, despite near-term headwinds. I'll share a few examples. This season, we further streamlined the TurboTax final experience into the Credit Karma app, and the number of customers using the experience to file their tax was over five times higher last year.
Speaker 3: With Credit Karma Money, we're innovating to help members get faster access to cash and make financial progress. This year, we saw over 45% growth in the number of TurboTax online customers who received a refund advance in a Credit Karma Money account. This integration allowed approved members to get money in their hands in as little as one minute.
Speaker 3: after the IRS accepted their return and drove increased debit card purchase activity, contributing to more than a hundred percent increase in Credit Karma money revenue during the quarter. Members who use this offering show higher engagement on Credit Karma which creates additional monetization opportunities over time.
Speaker 3: And with the Mint team now part of Credit Karma, we are building a new experience for members with time credit scores where Credit Karma is underpenetrated today. During the quarter we began rolling out Networ, which helps Prime members better understand their wealth.
Speaker 3: Our fourth big bet is to become the center of small business growth by helping our customers get new customers, get paid fast, manage capital, and pay employees with confidence in an omnichannel world. In payroll, our US 2BO payroll customers moved double digits this quarter, and they mixed up online customers choosing our high-end offerings increased by over a point, driving higher ARPCs.
Speaker 3: And in payments, we continue to innovate to drive digitization from creating an estimate to invoicing a customer to getting paid. Today, easier discovery, auto-enabled payments, instant deposits, and get paid up front are all helping drive adoption of our payments offering.
Speaker 3: leading to 20% total online payments volume growth this quarter. We are making significant progress digitizing B2B payments to accelerate and automate transactions between small businesses and ultimately improve their cash flow. We see a tremendous opportunity of 70% of B2B transactions are still completed with CHAPs.
Speaker 3: And following our launch of the QuickBooks Business Network to millions of our QBO customers in January , we're piloting our own native bill pay solution and launched the initial beta, dysfunctionality in QuickBooks earlier this month.
Speaker 3: Turning to MailChimp, 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 3 acceleration priorities with MailChimp. First, delivering on our vision of an end-to-end customer growth platform. Second, disrupting the mid-market by developing a full marketing automation, CRM, and e-commerce suite. And third, accelerating global growth with a holistic go-to-market approach. This quarter we made great progress against these priorities.