Q3 2024 Intuit Inc Earnings Call

David: Good afternoon. My name is David, and I'll be your conference operator. At this time, I would like to welcome everyone to Intuit's third quarter fiscal year 2024 conference call. All lines have been placed on mute to prevent any background noise.

Good afternoon, My name is David and I'll be your conference operator at this time I would like to welcome everyone to Intuit's third quarter fiscal year 2024 conference call.

All lines have been placed on mute to prevent any background noise.

After the Speakers' remarks, there will be a question and answer period.

If you would like to ask a question during that time simply press the star and the number one on your telephone keypad.

If you would like to withdraw your question you can press star two.

Speaker Change: With that ill now turn the call over to Kim Watkins Intuit's, Vice President of Investor Relations Ms. Watkins.

Yeah.

Miss Watkins D room, Mike might be muted.

David: After the speaker's remarks, there will be a question and answer period. If you would like to ask a question during that time, simply press the star and the number one on your telephone keypad. If you would like to withdraw your question, you can press star and two.

David: Good afternoon, My name is David and I'll be your conference operator at this time I would like to welcome everyone to Intuit's third quarter fiscal year 2024 conference call all.

Speaker Change: All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer period feels like to ask a question during that time. Please press star and the number one on your telephone keypad. If you would like to withdraw your question. Please press star and two.

Speaker Change: With that I will now turn the call over to Kim Watkins Intuit's, Vice President of Investor Relations.

David: With that, I'll now turn the call over to Kim Watkins, Intuit's Vice President of Investor Relations. Ms. Watkins? Ms. Watkins, the room mic might be muted. Good afternoon. My name is David, and I'll be your conference operator. At this time, I would like to welcome everyone to Intuit's third quarter fiscal year 2024 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 that time,

David: Thanks, David.

Speaker Change: Afternoon, and welcome to Intuit's third quarter fiscal 2024 conference call.

Speaker Change: I'm here with Intuit, CEO presented RB and our CFO Sandeep Angela.

Kimberly Anderson Watkins: Thanks, David. Good afternoon, and welcome to Intuit's third quarter fiscal 2024 conference call. I'm here with Intuit's CEO, Sasan Goodarzi, and our CFO, Sandeep Aujla. 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 2023, and our other SEC filings.

Speaker Change: 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 2023, and our other SEC filings.

Kimberly Anderson Watkins: 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. Some of the numbers in these remarks are presented on a non-GAAP basis. We've reconciled the comparable GAAP and non-GAAP numbers in today's press release.

All of those documents are available on the Investor Relations page of Intuit's website at Intuit Dot com.

Speaker Change: We assume no obligation to update any forward looking statement.

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

Speaker Change: 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.

Speaker Change: With that I'll turn the call over to Scott, Thanks, Kim and thanks to all of you for joining US today, we had a strong quarter with solid momentum across the company as we executed our strategy to be the global AI driven expert platform powering prosperity for consumers and small businesses.

Sasan K. Goodarzi: Sasan. Thanks, Kim, and thanks to all of you for joining us today. We had a strong quarter with solid momentum across the company as we executed our strategy to be the global AI-driven expert platform powering prosperity for consumers and small businesses. Third quarter revenue grew 12%. Small business and self-employed group revenue grew 18% despite an uncertain macro environment, demonstrating the importance of our platform in fueling success for small businesses and our momentum serving the mid-market.

Scott: Third our third quarter revenue grew 12% small business and self employed group revenue grew 18%, despite an uncertain macro environment, demonstrating the importance of our platform and fueling success for small businesses and our momentum serving the mid market.

Sasan K. Goodarzi: Consumer group revenue grew 9%, and Credit Karma revenue grew 8%, driven by the impact of innovation for members and the benefits of TurboTax and Credit Karma product integration. I'm proud of our performance and the momentum we're seeing across the company. Turning to taxes, we continue to revolutionize how taxes get done for consumers and small businesses. Tax preparation represents a $35 billion TAM in the U.S. This includes $31 billion within the assisted, consumer, and business tax categories. We're well-positioned to penetrate the assisted TAM by leveraging data, AI, and our virtual expert platform. Let me share several proof points.

Consumer group revenue grew 9% and credit Karma revenue grew 8% driven by the impact of innovation for members and the benefits of Turbotax and credit Karma product integration.

Scott: I'm proud of our performance and the momentum we're seeing across the company.

Scott: Turning to tax we continue to revolutionize how taxes get guidance for consumers and small businesses.

Scott: <unk> preparation represents a $35 billion Tam in the U S. This includes 31 billion within the assisted consumer and business tax categories. We are well positioned to penetrate the assisted Tam by leveraging data AI and our virtual expert platform, let me share several proof points.

Sasan K. Goodarzi: This season, we made good progress against our multi-year strategy to transform the assisted experience for customers. TurboTax Live, our assisted offering, including our do-it-with-me and full service tax offerings for both consumers and businesses, is the largest durable growth opportunity. We expect TurboTax Live customers to grow 12% and revenue to grow 17% in fiscal year 2024. TurboTax Live revenue is expected to be $1.4 billion, representing approximately 30% of total consumer group revenue growing at a significant scale. This gives us confidence that we can digitize a very manual, disaggregated, and high-priced assisted category. Now, let me spend a few minutes going deeper in several areas.

Scott: This season, we made good progress against our multiyear strategy to transform the assisted experience for customers.

Scott: Oh tax lives are assisted offering including our do it with me and full service tax offerings for both consumers and businesses is the largest durable growth opportunity, we expect turbotax live customers to grow 12% and revenue to grow 17% in fiscal year 2020 for.

Scott: Turbotax live revenue is expected to be $1 4 billion, representing approximately 30% of total consumer group revenue growing at a significant scale.

Scott: This gives us confidence that we can digitize, a very manual disaggregated and high price specific category.

Scott: Now, let me spend a few minutes going deeper in several areas first turbotax live full service is resonating with consumers as we continue to innovate and making it simpler for customers to get their taxes done virtually we.

Sasan K. Goodarzi: First, TurboTax Live full service is responding with consumers as we continue to innovate and make it simpler for customers to get their taxes done virtually. We expect TurboTax Live full service customers to double this fiscal year, with those new to TurboTax to triple. Our full service offering has a product recommendation score of 85, one of the highest at Intuit. Our learnings and insights from this season bolster our confidence in the continued opportunity we have to disrupt the assisted category.

Scott: We expect Turbotax live full service customers to double this fiscal year with those new to turbotax to triple.

Scott: Our full service offering has a product recommendation score of 85, one of the highest add into it.

Scott: Our learnings and insights from this season and bolster our confidence in the continued opportunity we have to disrupt the assisted category.

Sasan K. Goodarzi: Second, we expect TurboTax to gain share with higher ARPR filers as we strategically prioritize focusing on the assisted tax segment and higher value customers over pay nothing and lower ARPR segments. Third, Intuit Assist, our Gen AI-powered financial assistant, played a big role in our TurboTax experience this year. With Intuit Assist, we're creating a future of done-for-you where the hard work is done automagically on behalf of our customers with a gateway to human expertise, fueling their financial success. More than 24 million customers used Intuit Assist to explain their refunds, answer questions, and help deliver confidence that their return was completed accurately this year.

Scott: Second we expect turbotax to gain share with higher AARP, our filers as we strategically prioritize focusing on the assisted tax segment and higher value customers over pay nothing and lower <unk> segment.

Scott: Third Intuit assist our Gen AI powered financial assistant played a big role in our turbotax experience this year.

Scott: With Intuit assess we're creating a future of done for you where the hard work is done automatically on behalf of our customers with a gateway to human expertise fueling their financial success.

Scott: More than 24 million customers used intuit assist to explain their refunds answer questions and help deliver confidence that their return was completed accurately this year.

Sasan K. Goodarzi: This is data and Gen-AI working at scale for both our customers and our AI-powered experts helping customers virtually. I'm excited about what we're working on for next season to accelerate innovation and deliver even more customer benefits. And fourth, we delivered solid results with the product integration across Credit Karma and TurboTax. We grew the number of customers that filed with TurboTax from the embedded Credit Karma experience by 76%, and tax refunds deposited into a Credit Karma money account by 28%.

Scott: This is that data and Jen AI working at scale for both our customers and our AI powered experts helping customers virtually.

Scott: We're excited about what we're working on for next season to accelerate innovation and deliver even more customer benefits.

Scott: And fourth we delivered solid results with the product integration across credit Karma in Turbotax. We grew the number of customers that filed with turbotax from the embedded credit karma experienced by 76% and tax refund deposit and a credit Karma money account by 28%. We also delivered strong growth in credit Karma money revenue.

Sasan K. Goodarzi: We also delivered strong growth in Credit Karma money revenue this quarter. This product integration also drove new members to Credit Karma, consistent with our goal of driving higher engagement and monetization for Credit Karma over time. Given these results, we see big opportunities ahead to deliver on our vision to help consumers make ends meet, maximize their tax refund, save more money, pay off debt, and take steps to improve their financial health. To significantly accelerate creating seamless end-to-end consumer experiences that customers benefit from year-round, we are more closely aligning TurboTax and Credit Karma under Mark Notarainni, General Manager of the Consumer Group, who will oversee both segments. I'm excited to share that Joe Kauffman, currently President of Credit Karma and part of the leadership team for the last nine years, will be leading Credit Karma as of August 1st, reporting to Mark.

Scott: This quarter.

Scott: This product integration also drove new members to credit Karma consistent with our goal of driving higher engagement and monetization for credit Karma overtime given.

Given these results we see big opportunities ahead to deliver on our vision to help consumers make ends meet maximize their tax refund save more money pay off debt and take steps to improve their financial health.

Scott: To significantly accelerate creating seamless end to end consumer experiences that customers benefit from year round. We are more closely aligning turbotax and credit Karma under Mark North Ronnie General manager of the consumer group, who will oversee both segments I am excited to share that Joe Kaufman currently president of credit Karma and part of the leadership team for that.

Scott: Last nine years will be leading credit Karma as of August 1st reporting Tomorrow. Additionally, Ken Lin who will retire from into it around the end of this calendar year.

Sasan K. Goodarzi: Additionally, Ken Lin will retire from Intuit around the end of this calendar year. I can't thank Ken enough for his friendship, leadership, and impact across the company. In summary, we made strong progress this tax season that sets us up for continued success in the future. Now, let's take a look ahead. The era of AI is one of the most significant technological shifts of our lifetime.

Chad: Chad Thanks, Ken enough for his friendship leadership impact across the company.

Chad: In summary, we made strong progress this tax season that sets us up for continued success in the future.

Chad: Now, let's take a look ahead the era of AI is one of the most significant technology shifts of our lifetime.

Sasan K. Goodarzi: It is reinventing customer experiences, creating new monetization possibilities, and structurally changing how we work within Intuit to deliver for customers. We're very well positioned to take advantage of this era with our AI-driven expert platform strategy and five big bets to pursue the largest customer problems and growth drivers for Intuit. As part of our financial planning process, we have identified key areas within our big bets where we plan to accelerate investments to deliver greater impact.

Chad: It is reinventing customer experiences, creating new monetization possibilities and structurally changing how we work with an intuitive to deliver for customers. We're very well positioned to take advantage of this era with our AI driven expert platform strategy and five big bets to pursue the largest customer problems and growth drivers for them to us.

Chad: As part of our financial planning process, we have identified key areas within our big bets, where we plan to accelerate investments to deliver greater impact.

Sasan K. Goodarzi: These include Big Bet One, Gen AI to deliver done-for-you experiences with Intuit Assist, Big Vet 2, go-to-market investments for TurboTax Live and QuickBooks Live, embedding AI-powered experts across our small business offerings, and Big Bet 4, our money solution to digitize the experience end-to-end for consumers and small businesses, from estimates, invoicing, to getting paid and paying bills.

Chad: These include Big bet, one Gen AI to deliver done for your experiences with Intuit is this big.

Chad: <unk> got to go to market investments for Turbotax live and Quickbooks live embedding AI powered experts across our small business offerings.

Chad: For our money solutions to digitize the experience end to end for consumers and small businesses from estimates invoicing to getting paid and paying bills.

Sasan K. Goodarzi: Big Bets 5, doubling down on mid-market with additional investments in platform and go-to-market activities, and finally, accelerating international growth with Mailchimp and QuickBooks. To increase our investments in the outlying focus areas given the green shoots we're observing, we are taking a hard look at what we can stop doing and where we can reallocate investments to accelerate top-line growth while remaining committed to delivering operating margin expansion in fiscal year 20 Wrapping up, we're excited about the opportunity ahead and our ability to power prosperity for customers. Now, let me hand it over to Sandeep.

Chad: Big bet five doubling down on mid market with additional investments in the platform and go to market motions, and finally accelerating international growth with mail chimp and Quickbooks.

Chad: To increase our investments in the outline focus areas given the green shoots we're observing we are taking a hard look at what we can stop doing and where we can reallocate investments to accelerate topline growth while remaining committed to delivering operating margin expansion in fiscal year 2025 and beyond.

Speaker Change: <unk>, we're excited about the opportunity ahead, and our ability to power prosperity for customers now, let me hand, it over to Sandy.

Sandeep Singh Aujla: Thanks, Sasan. We delivered a solid third quarter of Fiscal 2024 across the company. Our third quarter results include revenue of $6.7 billion, up 12%, and gap increasing income of $3.1 billion, versus $2.8 billion last year, up 12%. Non-gap netting income of $3.7 billion, versus $3.4 billion last year, up 11%. Gap diluted earnings per share of $8.42, versus $7.3 billion, up 11%. Non-gap diluted earnings per share of $9.88 versus $8.92 last year, up 11%.

Sandy: Thanks, Hassan we delivered a solid third quarter of fiscal 2024 across the company our third quarter.

Sandy: Results include revenue of $6 7 billion up 12% GAAP operating income of $3 1 billion versus $2 8 billion last year up 12% non-GAAP operating income of $3 7 billion versus $3 4 billion last year up to 11% GAAP diluted earnings per share.

Sandy: <unk> of $8 42.

Sandy: Versus $7 38, a year ago up 14% and non-GAAP diluted earnings per share of $9 88.

Sandy: Versus $8.92 last year up 11%.

Sandeep Singh Aujla: Now turning to the business segment, Consumer Group revenue of $3.7 billion grew 9% in Q3, reflecting the progress we made transforming the SIFT experience for consumers and small businesses this season. Our strategy is working. We expect TurboTax Live Revenue to grow 17% to $1.4 billion in fiscal 2024, representing approximately 30% of overall Consumer Group revenue, driving total average revenue per return up approximately 10%. I am pleased with the sustained growth we are seeing in our TurboTax Live business. Overall retention is expected to be up three points year-over-year in fiscal 2024, close to pre-COVID levels, demonstrating the strength of our offerings and high customer satisfaction.

Sandy: Now turning to the business segments.

Sandy: Consumer group revenue of $3 7 billion grew 9% in Q3, reflecting the progress we've made transforming the assisted experience for consumers and small businesses. This season.

Sandy: <unk> is working we expect turbotax live revenue to grow 17% to $1 4 billion in fiscal 2024, representing approximately 30% of overall consumer group revenue.

Sandy: <unk> total average revenue per return.

Sandy: Proximately, 10% I am pleased with the sustained growth we are seeing in our turbotax slide business.

Sandy: Overall retention is expected to be up three points year over year in fiscal 2024 close to pre COVID-19 levels, demonstrating the strength of our offerings and highlighting the benefits we are delivering to our customers.

Speaker Change: <unk> shared earlier, we expect turbotax to gain share with higher AARP, our filers etsy strategically prioritize focusing on the assisted tax and the higher <unk> customers over to pay nothing and lower ERP. Our segment as a result, we expect turbotax live customers to growth.

Speaker Change: 5% and total phone lines paying units to grow approximately 2% in fiscal 2024 versus total IRS returns growth of 1%.

Sandeep Singh Aujla: Due to yielding share with pay nothing and lower ARPR customers, we expect our share of total consumer returns to decline approximately 80 basis points this year and total server tax units to decline 1%. We are raising our full-year consumer group revenue growth guidance to $4.44 billion to $4.455 billion, which is at the top end of our previously provided guidance. I am proud of the progress we made this season, and the learnings we have had reinforce our confidence in the future.

Speaker Change: Due to yielding share with pay nothing and lower ERP our customers need.

Speaker Change: Our share of total consumer returns to decline approximately 80 basis points this year.

Speaker Change: And total turbotax units to decline 1%.

Speaker Change: We are raising our full year consumer group revenue growth guidance to $4 four 4 billion to $4 455 billion, which is at the top end of our previously provided guidance I am proud of the progress we've made to season and the learnings we had reinforced our confidence in the future.

Sandeep Singh Aujla: We continue to expect consumer group revenue growth of 8% to 12% long-term, given the size and trajectory of TurboTax Live. Turning to the pro-tax group, revenue grew 3% in the third quarter. For the full year, we now expect pro-tax group revenue growth of 6-7%.

Speaker Change: Can you to expect consumer group revenue growth of 8% to 12% long term given the size and trajectory of turbotax slide.

Speaker Change: Turning to that protects group revenue grew 3% in the third quarter for the full year. We now expect protest group revenue growth of 6% to 7%.

Sandeep Singh Aujla: Turning to the small business and self-employed group, revenue grew 18% during the quarter, driven by online ecosystem revenue, which grew 19%. Our results continue to demonstrate the power of our small business platform and the mission-critical nature of our offering, which resonates with customers as they look to grow their business and improve cash flow in any economic environment. With the goal of being the source of truth for small businesses, a strategic focus within the small business and self-employed group is threefold.

Speaker Change: Turning to the small business and self employed group revenue grew 18% during the quarter driven by online ecosystem revenue, which grew 19%.

Speaker Change: Our results continue to demonstrate the power of our small business platform and the mission critical nature of our offerings, which resonate with customers as they look to grow the business and improve cash flow in any economic environment.

Speaker Change: 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.

Sandeep Singh Aujla: Grow the core, connect the ecosystem, and expand globally. First, we continue to focus on growing the core. QuickBooks Online Accounting revenue grew 19% in Q3, driven by customer growth, higher effective prices, and makeshift. As I shared last quarter, we continue to prioritize disrupting the small business mid-market to continue to focus on go-to-market activities and product innovations. Mid-market customers drive a higher ARPC over time, given their more complex needs and higher usage of services on our platform, although they are a smaller subset of our total customer TAM. This helpful business strategy to sell more of our ecosystem offerings to existing customers shifts the emphasis in our growth formula towards higher ARPC over time. Second, we continue to focus on connecting the ecosystem.

Speaker Change: Yes.

Speaker Change: First we continue to focus on growing the core Quickbooks online accounting revenue grew 19% in Q3, driven by customer growth higher effective prices and mix shift as I shared last quarter. We continue to prioritize disrupting the small business mid market. Two continued focus on go to market motions and product innovations.

Mid market customers to drive a higher RPC over time, given their more complex needs and higher usage of services on our platform.

Speaker Change: Although they are a smaller subset of our total customer Tam this coupled with our strategy to sell more of our ecosystem offerings to existing customers shift the emphasis in our growth formula towards RPC over time.

Speaker Change: Second we continue to focus on connecting the ecosystem.

Sandeep Singh Aujla: Online services revenue grew 20% in Q3, driven by payments, payroll, and mailchimp. Within payments, revenue growth in the quarter reflects higher effective prices, ongoing customer growth as more customers adopt the payment offerings to manage their cashflow, and an increase in total payment volume per customer. Total online payment volume growth in Q3 was 22%.

Speaker Change: Online services revenue grew 20% in Q3, driven by payments payroll and mill chip.

Speaker Change: Within payment revenue growth in the quarter reflects higher effective prices ongoing customer growth as more customers adopt payment offerings to manage their cash flow and an increase in total payment volume per customer.

Speaker Change: All lines payment volume growth in Q3 was 22%.

Sandeep Singh Aujla: With payroll, revenue growth in the quarter reflects an increase in customers adopting our payroll solutions, higher effective prices, and a makeshift towards higher-end offerings. Millions of revenue growth were driven by higher effective prices and paid customer growth. Revenue growth in the milk chain decelerated this quarter as we were lacking a larger benefit from price and lineup changes that we made last year.

Speaker Change: Payroll revenue growth in the quarter reflects an increase in customers adopting apparel solutions higher effective prices and mix shift towards higher end offerings.

Speaker Change: Merchant revenue growth was driven by a higher effective prices and paid customer growth revs.

Revenue growth in merchant decelerated this quarter as we were lapping a larger benefit from price and lineup changes that you made last year.

Sandeep Singh Aujla: Third, we continue to make progress expanding globally by executing a refreshed international strategy that includes leading with both QuickBooks Online and MailChimp in our established markets and leading with MailChimp in all other markets as we continue to execute on localized products and lineups. On a constant currency basis, total international online ecosystem revenue grew 12% in Q3. Shifting to the desktop ecosystem, desktop ecosystem revenue grew 14% in the third quarter, and QuickBooks desktop enterprise revenue grew in the high teens.

Speaker Change: Third we continue to make progress expanding globally by executing our refreshed international strategy, which includes leading with Quickbooks online merchants and I established market and leading with merchant in all other markets as we continue to execute our localized product lineup on a constant currency basis.

Speaker Change: International online ecosystem revenue grew 12% in Q3.

Shifting to the desk desktop ecosystem desktop ecosystem revenue grew 14% in the third quarter and Quickbooks desktop enterprise revenue grew in the high teens.

Sandeep Singh Aujla: At the end of this fiscal year, we will complete the three-year transition for customers that remain on a license-based desktop offering to a recurring subscription model. As I shared last quarter, starting next fiscal year, we expect our desktop enterprise offering, which accounts for over half of desktop accounting revenue, to grow in the high single-digit range. We will also continue to encourage remaining desktop subscription customers, who tend to be more complex and higher-value, to migrate seamlessly to either QuickBooks Online or to our desktop enterprise offering when they are ready.

Speaker Change: At the end of this fiscal year, we will complete the three year transition for customers that remain on a license based desktop offerings.

Speaker Change: Our recurring subscription model.

Speaker Change: I shared last quarter, starting next fiscal year, we expect our desktop enterprise offering which accounts for over half of desktop accounting revenue to grow in the high single digit range.

Speaker Change: We also will continue to encourage remaining desktop plus subscription customers, who tend to be more complex and higher value to migrate seamlessly to either quickbooks online for to our desktop enterprise offering when they are ready.

Sandeep Singh Aujla: Additionally, we see opportunities to continue to price products of value. The online ecosystem remains our growth catalyst in the longer term. As a result of the strong growth we are seeing in the small business and self-employed group, we are raising our full-year segment revenue growth guidance to 18%, up from the prior guidance of 16% to 17%. We continue to expect small business and self-employed group revenue growth of 15% to 20% over the long term. Moby Dick, Karate Karma.

Speaker Change: Additionally, we see opportunities to continue to price the product will value the online ecosystem remains a growth catalyst longer term.

Speaker Change: As a result of the strong growth we are seeing in the small business and self employed group. We are raising our full year segment revenue growth guidance to 18% up from the prior guidance of 16% to 17%. We continue to expect small business and self employed group revenue growth of 15% to 20%.

Speaker Change: Long term.

Speaker Change: Moving to credit Karma.

Sandeep Singh Aujla: Credit Karma delivered revenue of $443 million in Q3, up 8%. On a product basis, Credit Karma money accounted for three points of growth. Credit cards and auto insurance each accounted for two points, and personal loans accounted for one point.

Credit Karma delivered revenue of $443 million in Q3 up 8% on a product basis try to comment money accounted for three points of growth credit cards, and auto insurance each accounted for two points and personal loans accounted for one point.

Sandeep Singh Aujla: We saw strength in Credit Karma money from TurboTax customers choosing to deposit their refund in a Credit Karma money account, and we have seen a return to growth in the insurance segment. However, the overall picture remains mixed, reflecting uncertain macro trends as we continue to see select partners taking a conservative approach to extending credit in both personal loans and credit cards in Q3. We're updating our full-year credit card revenue growth guidance to a growth of 2% versus a prior guidance range of plus or minus 3% growth.

Speaker Change: We saw strength in credit Karma money from turbotax customers choosing to deposit their refund and a credit Karma money account and we are seeing a return to growth in the insurance segment. However, the overall picture remains mixed reflecting uncertain macro trends as you continue to see select partners, taking a conservative approach to extending credit.

Speaker Change: In personal loans and credit cards in Q3.

Speaker Change: We are updating our full year credit karma revenue growth guidance to a growth of 2% versus our prior guidance range of plus or minus 3% growth in summary, I am pleased with our continued momentum this fiscal year and opportunities ahead.

Sandeep Singh Aujla: In summary, I am pleased with our continued momentum this fiscal year and the opportunities ahead. Shifting to a balance sheet and capital allocation. Our financial principles guide our decisions. They remain our long-term commitment and are unchanged. We finished the quarter with approximately $4.7 billion in cash and investments and $6 billion in debt on a balance sheet. We repurchased $584 million of stock during the third quarter.

Speaker Change: Shifting to our balance sheet and capital allocation, our financial principles guide our decisions to remain on long term commitment and are unchanged. We finished the quarter with approximately $4 7 billion in cash and investments and 6 billion in debt on our balance sheet.

Speaker Change: We purchased $584 million of stock during the third quarter, depending on market conditions and other factors. Our aim is to beat the market each quarter.

Sandeep Singh Aujla: Depending on market conditions and other factors, our aim is to beat the market each quarter. The board approved a quarterly dividend of $0.90 per share, payable on July 18, 2024. This represents a 15% increase versus last year. Moving on to guidance, we are increasing our fiscal 2024 guidance. This includes total company revenue growth of 13%, up from prior guidance of 11% to 12% growth. [Inaudible] Our guidance for the fourth quarter of fiscal 2024 includes revenue growth of 13 to 14 percent, gap earnings per share of 25 cents to 30 cents, and non-gap earnings per share of $1.80 to $1.85.

Speaker Change: The board approved a quarterly dividend of <unk> 19 per share payable on July 18, 2024. This represents a 15% increase versus last year.

Speaker Change: Moving on to guidance.

Speaker Change: Increasing our fiscal 2024 guidance. This includes total company revenue growth of 13% up from prior guidance of 11% to 12% growth.

Speaker Change: GAAP operating income growth of 21% to 22% up from prior guidance of 15% to 18% growth non-GAAP operating income growth of 16% up from prior guidance of 12% to 16% growth GAAP diluted earnings per share growth of 28% to 29% up from prior guidance of <unk> 11.

Speaker Change: To 15% growth and non-GAAP diluted earnings per share growth of 17% up from prior guidance of 12% to 14% growth.

Speaker Change: Our guidance for the fourth quarter of fiscal 2024 include revenue growth of 13% to 14%.

Speaker Change: GAAP earnings per share of <unk> 25 to 30, and non-GAAP earnings per share of $1 80 to $1 85.

Sandeep Singh Aujla: You can find full fiscal 2024 and Q4 guidance details in our press release and on our fact sheet. Finally, as Sasan shared earlier, we have made strong progress on our five big bets and see opportunities to invest further in select focus areas to accelerate our pace of progress and deliver greater impact. Therefore, as part of our annual financial planning process, we are taking a hard look at reallocating investments. We remain committed to our financial principle, growing revenue double digits and growing operating income dollars faster. However, slower than revenue, leading to an expanding operating margin in fiscal 2025 and beyond.

Speaker Change: You can find our full fiscal 2024, and Q4 guidance details in our press release and on our fact sheet.

Speaker Change: Finally, <unk> shared earlier, we have made strong progress on our five big bets and see opportunities to invest further inflect focused areas to accelerate our pace of progress and deliver greater impact therefore.

Speaker Change: Part of our annual financial planning process, we are taking a hard look at reallocating investments, we remain committed to our financial principle growing revenue double digits and growing operating income dollars faster.

Lower than revenue, leading to expanding operating margin in fiscal 2025 and beyond with that I'll turn it back over to Stephane.

Sasan K. Goodarzi: With that, I'll turn it back over to Sasan. Great. Thank you, Sandeep.

Sasan K. Goodarzi: Great, thank you, Sandeep. Let me close with three points. First, we're very well positioned to take advantage of the largest technological shift of our era, given Intuit's strategy and five big bets with AI at the center of all we do. Second, given the green shoots we're observing, we are doubling down on key areas of our bets to accelerate growth. Third, we continue to recruit great technical and leadership talent across the company to accelerate our progress.

Stephane: Thank you Sandeep, let me close with three points.

Stephane: First we're very well positioned to take advantage of the largest technological shift of our era, given intuit strategy in five big bets with AI at the center as all we do.

Stephane: Given the green shoots we're observing we are doubling down in key areas of our best to accelerate growth.

Stephane: We continue to recruit great technical and leadership talent across the company to accelerate our progress in that context, I would like to share that Greg Johnson recently returned as executive Vice President and Chief Commercial Officer, and global small business and self employed group Chief revenue Officer, Reg as a world.

Sasan K. Goodarzi: In that context, I'd like to share that Greg Johnson recently returned as Executive Vice President, Intuit Chief Commercial Officer, and Global Small Business and Self-Employed Group Chief Revenue Officer. Greg is a world-class leader with nearly 10 years of experience at Intuit, leading TurboTax as the head of marketing and then as general manager. I'm thrilled to have Greg back at Intuit. Now, let's open it up to your questions.

Stephane: Class leader with nearly 10 years of experience at Intuit, leading turbotax as the head of marketing and then as general manager I'm thrilled to have Greg back into it now let's open it up to your questions.

Stephane: Okay.

David: Ladies and gentlemen, if you would like to ask a question at this time, please press the star key and the number one on your telephone keypad. If you would like to withdraw your question, please press star and two. We ask that you limit yourself to one question, as we'd like to get to as many people as we can. We'll take our first question from Keith Weiss with Morgan Stanley. Please go ahead; your line is open.

Stephane: Sure.

Speaker Change: Ladies and gentlemen, if you would like to ask a question at this time. Please press the star key and the number one on your telephone keypad. If you would like to withdraw your question. Please press star two.

Speaker Change: We ask that you limit yourself to one question, so we'd like to get to as many people as we can.

Speaker Change: We'll take our first question from Keith Weiss with Morgan Stanley. Please go ahead. Your line is open.

Keith Weiss: Thank you guys for taking the question. And a really nice quarter in that he has really flexed the ability to use the portfolio to outperform on the top line and outperform on the bottom line. And in what has been a pretty difficult earnings season, actually taking earnings off right here, your full year EPS is coming off

Speaker Change: Thank you guys for taking the questions.

Keith Weiss: Really nice quarter and that really reflects the ability to use the portfolio to outperform on the top line and outperform on the bottom line and what has been a pretty difficult earning season.

Speaker Change: Actually taking earnings or hear your full year EPS is coming off so that's all great to see.

Keith Weiss: So that's all great to see.

Keith Weiss: I wanted to ask you about the tax business overall.

Speaker Change: I wanted to ask you about the tax business overall.

Keith Weiss: The shift towards kind of the high end, the higher ARP

Speaker Change: The shift towards kind of the high end higher AARP customers. She is more pronounced this year probably than what I was expecting I think most people were expecting.

Speaker Change: The underlying question most investments labs like why can't we do both right.

Price for the low end and get those customers onboard as well as attracting those higher AARP customers.

Speaker Change: Is that available to you or do you need to be shifting more of our market.

Keith Weiss: [inaudible]

Speaker Change: Hey, Keith Thank you very much for the compliment and in your question. Let me let me address your question in a couple of ways first of all I'll start with some of what we already shared but it's important context in that.

Speaker Change: We're really bullish in terms of what we saw with Turbotax live going after the assisted segment because now you have a $1 4 billion business growing at 17% and with that being 30% of the total turbotax franchise, when we flip that over to now become 50% 60%.

Keith Weiss: I think the underlying question most investors have is, like, why can't we do both?

Speaker Change: Of the franchise it really accelerates the growth of the entire turbotax franchise and what we demonstrated this year I would almost say for the first time as we move the needle are taking share and assistant.

Keith Weiss: Why can't we price for the low end and get those customers on board as well?

Speaker Change: When you look at the fact that.

Speaker Change: Although IRS grew 1% most of that growth all happened in DIY, mainly with sort of a free simple filer customers.

Speaker Change: <unk> was flat and Thats why we took share and I think that is a first sort of time of a sign that we're starting to build a flywheel effect.

Speaker Change: It gives us a lot of confidence as we look into the future I think the second thing that I would say is we.

Sasan K. Goodarzi: [inaudible] Hey, Keith. Thank you very much for the compliment and your question. Let me address your question in a couple of ways. First of all, I'll start with some of what we already shared, but it's important context in that we're really bullish in terms of what we saw with TurboTax Live going after the assisted segment because now you have a $1.4 billion business growing at 17%. And with that being 30% of the total TurboTax franchise, when we flip that over to now, it becomes 50, 60% of the franchise, and it really accelerates the growth of the entire TurboTax franchise.

Speaker Change: Because of our credit Karma and Turbotax platform, we actually see the customers that are just really looking for a free tax software and are bouncing between platforms and we are not interested in those customers were not interested in pursuing those customers the cost of acquisition to get those customers when they simply are bouncing between.

Sasan K. Goodarzi: And what we demonstrated this year, I would almost say for the first time, is that we moved the needle on taking share in assisted. The cost of acquisition to get those customers when they simply are bouncing between platforms, we're really focused on the quality of the customers, particularly because now we've just scratched the surface of the service in the assisted segment, and what really matters is now accelerating the share take in the assisted segment. So that's really how we're thinking about it and what gives us confidence in not only what we can deliver but particularly in the future.

Speaker Change: Platforms, we're really focus on quality of the customers, particularly because now we've just scratched the service in the assisted segment and what really matters is now accelerating the share take in the assisted segment. So that's really how we're thinking about it and what gives us confidence in not only what we delivered but particularly in the future.

Keith Weiss: Got it. It makes sense, then. Thanks so much, guys.

Speaker Change: Got it makes sense. Thanks, so much guys.

Speaker Change: Thank you.

David: We'll take our next question from Daniel Jester with BMO Capital Markets. Please go ahead. Your line is open.

Speaker Change: We will take our next question from Daniel Jester with BMO capital markets. Please go ahead. Your line is open.

Daniel William Jester: Great. Thanks for taking my question.

Daniel William Jester: Great. Thanks for taking my question.

Daniel William Jester: I just actually want to expand on... So on the one hand, you talked about focusing more on sort of the higher end of the market, but you're also talking about deepening the integration between Credit Karma and TurboTax in the future. And so can you maybe expand a little bit more, especially around the Credit Karma and TurboTax integration and what we should be expecting going forward? Thank you.

Daniel William Jester: Just actually wanted to expand on that.

Daniel William Jester: The comments you've made so.

Speaker Change: On one hand, you talked about.

Speaker Change: Focusing more on sort of the higher end of the market, but you're also talking about deepening the integration between credit Karma.

Speaker Change: And turbotax in the future and so can you just maybe expand a little bit more especially around the credit Karma and turbotax integration, what we should be expecting going forward. Thank you.

Sasan K. Goodarzi: Yeah, absolutely. You know, this year, particularly, we're very excited about what we saw and actually what didn't work. And let me, if I could, hit on both.

Speaker Change: Yeah absolutely.

Speaker Change: This year, particularly.

Speaker Change: We're very excited about what we saw and actually what didn't work and let me if I could hit on hit on both first and foremost.

Sasan K. Goodarzi: First and foremost, Credit Karma has over 40 million monthly active users, and a larger chunk of those 40 million plus active users are actually doing their taxes using the assisted method. And so that's an enormous opportunity for us. This year, we embedded the TurboTax experience within Credit Karma, and we're very aggressive pursuing those customers. And in fact, we drove traffic north of 10 million within Credit Karma from those that were interested in doing their taxes with TurboTax.

Speaker Change: Credit Karma has over 40 million monthly active users and a larger chunk of those 40 million plus active users are actually doing their taxes easing the assisted method and so that's an enormous opportunity for us.

Sasan K. Goodarzi: That's why it resulted in a 76% growth in the number of TurboTax customers that use the embedded experience within Credit Karma. But at the same time, there are two very basic things that did not work well this year.

Speaker Change: This year, we embedded the turbotax experience within credit Karma, and we're very aggressively pursuing those customers and in fact, we drove traffic north of $10 million within credit Karma of those that were interested in doing their taxes with turbotax.

Speaker Change: Why it resulted in a 76% growth of the number of turbotax customers.

Speaker Change: That use the embedded experience within credit Karma at the same time.

Speaker Change: What we are constructively dissatisfied are two very basic things that did not work well this year.

Sasan K. Goodarzi: One was seamless login, and the second was the performance of the app. And what I mean by seamless login is out of those 10 million plus customers that, you know, were in the bucket of traffic, about 25% of them, when they clicked to start doing their taxes with us or have us do it for them, they didn't have any friction. They could just get started right away, where 75% of them could not. There was a lot of friction, and that was just an element of time. We were not able to get to all the work that was required to get everyone to experience, in essence, no login.

Speaker Change: One was seamless login. The second was the performance of the App and what I mean by seamless login is out of those 10 million plus customers that were in the bucket of traffic about 25% of them when they click to start doing their taxes with us or have us do it for them. They didn't have any friction that could just get started.

Speaker Change: It away, where 75% of them could not there was a lot of friction and that was just an element of time, we were not able to get to all the work that was required to get everyone to experience in essence, no login and Thats, a big deal and that we're all over it already the second is performance of the App, we worked very hard to embed the turbotax experience.

Sasan K. Goodarzi: And that's a big deal. And we're all over it already. The second is performance of the app. We worked very hard to embed the TurboTax experience within Credit Karma, but the performance of the app was not where it needed to be. When I say performance of the app, some of the times that it took were like eight to seven seconds just for the app to be able to load.

Speaker Change: <unk> within credit Karma, but the performance of the App was not where it needs to be when I say performance of the App. Some some of the time that it took was like eight to seven seconds just to further that the app to be able to load that's unacceptable and we saw a lot of drop off both of those are in our control of both of those.

Sasan K. Goodarzi: That's unacceptable, and we saw a lot of drop-off. Both of those are in our control. We are already working on both of those. But I share that as an example of how we saw a huge green shoot with our focus this year on every Credit Karma member becoming a TurboTax customer. And there are two very basic things that we're constructively dissatisfied with that give us actually a lot of confidence as we look into the future.

Speaker Change: Are already working on but I share that as an example.

Speaker Change: We saw a huge green shoot with our focus this year on every credit Karma member, becoming a turbotax customer and Theres two very basic things that we're constructively dissatisfied with that gives us actually a lot of confidence as we look into the into the future. So hopefully that answers your question.

Sasan K. Goodarzi: So hopefully, that answers your question. That's great. Thanks for the contact. You're very welcome.

Speaker Change: That's great. Thanks for the context.

Speaker Change: Very welcome.

David: We'll take our next question from Siti Panigrahi with Mizuho.

Speaker Change: We'll take our next question from Cte Panic, Ronnie with Mizuho. Please go ahead. Your line is open.

Thank you. Thanks for taking my question and Susan I wanted to ask you about your vision and strategy for the money platform Multipart question. There with some we have seen you expanded invoice to build they would love to get your.

Speaker Change: Progress so far any feedback there in the last couple of quarters, but also we saw that you recently acquired appropriate finance and also made some.

Speaker Change: Hiring senior executive hiding in the monarch platform side, So love to hear your strategy, and which directs and it's growing in our monarch platform.

Sitikantha Panigrahi: platform side. So we'd love to hear your strategy and which direction it's going in on the money platform.

Sasan K. Goodarzi: Thank you for the question. Let me actually talk about the focus around money on two dimensions that we're very, very excited about. And as you also heard in our prepared remarks, this is an area where we are accelerating our investments. We are seeing a lot of green shoots with all the work that we've been doing the last several years, really digitizing the whole process of estimating to invoicing to getting paid and having multiple payment options, along with the bill pay capabilities that we've built that we are now rolling out to our customers. We're seeing a lot of green shoots in both of those areas.

Speaker Change: Sure. Thank you for the question, let me actually talk about the focus around money on two dimensions that we're very very excited about.

Speaker Change: And as you also heard in our prepared remarks. This is an area where we are accelerating our investments we are seeing a lot of green shoots with all the work that we've been doing over the last several years really digitizing the whole process of estimating the invoicing to getting paid and having multiple paying options along with the <unk>.

Speaker Change: The abilities that we built that we are now rolling out to our customers. We're seeing a lot of green shoots in both of those areas you saw a pretty tough macro environment. Our payments overall total payments volume was up 22% and Thats an area, where we are accelerating our investment that's on the small business side. The thing that we're also excited.

Sasan K. Goodarzi: You saw that in a pretty tough macro environment, our overall total payments volume was up 22%. And that's an area where we're accelerating our investment. That's on the small business side. The thing that we're also excited about is the money focus across the TurboTax Credit Karma platform. We saw a lot of green shoots this year with a 20% or 28% increase in the number of customers that put their refund on a Credit Karma money account. We're excited about it, not because of the 28%. We actually believe that it could be far bigger.

Speaker Change: About.

Speaker Change: Is money focus across the turbotax credit Karma platform, we saw a lot of green shoots this year with a 20% or 28% increase of the number of customers that put their refund on a credit karma money account.

Excited about it not because of the 28%, we actually believe that could be far bigger, but because of the areas of friction that we are going to remove and the fact that we have opportunities to give much earlier access to their tax refund and actually monetize it. So those are the two areas across our <unk>.

Sasan K. Goodarzi: But because of the areas of friction that we are going to remove, and the fact that we have opportunities to give much earlier access to their tax refund, and actually monetize it. So those are the two areas across our small business and consumer platform that we are focused on. And we're accelerating our investments across both of those platforms in the coming year, and C.B. on the acquisition, you mentioned it.

Speaker Change: Business and consumer platform that we are focused on and we're accelerating our investments across both of those platforms in the coming year.

Sasan K. Goodarzi: And Siddhi, on the acquisition, you mentioned it. As you have shared with me in the past, we are continually looking to buy, build, partner, and that was a small technology tuck-in that we did to build some of the core money movement and risk management capabilities within our small business group.

And CD on the acquisition you mentioned Nick.

Shared within the past year continue looking at.

Speaker Change: By both partner and that was a small technology tuck ins that we did to build some of the core.

Speaker Change: Our money movement and risk management capabilities.

Speaker Change: Our small business group.

Speaker Change: Thank you.

Very welcome.

David: We'll take our next question from Aleks Markgraff with KeyBank Capital Markets. Please go ahead, your line is open. Great. Thank you for taking my questions, Sasan.

Speaker Change: We will take our next question from Alex <unk> with Keybanc capital markets. Please go ahead. Your line is open.

Alexander Wexler Markgraff: Just one for you on TurboTax. Just looking at recent and yesterday's slides and sort of the long-term growth framework for the business, when we look at this total TurboTax share of IRS returns, I think it implies some positive... Sheridan over the long term. And I'm just curious, I understand the focus on the assisted category, but should we be thinking about that input differently as it relates to total IRS returns going forward just given what we're seeing at the lower end of the spectrum?

Great. Thank you for taking my questions just on just one for you on turbotax.

Looking at recent investor slides and sort of the long term growth framework for the business.

Speaker Change: When we look at this total turbotax share of IRS returns I think implies sort of a positive.

Dan: Sure Dan over the long term and I'm, just curious I understand the focus on the assisted category.

Speaker Change: Should we be thinking about that.

Speaker Change: Put differently.

Speaker Change: As it relates to total IRS returns going forward just given.

Speaker Change: What we're seeing at the lower end of the spectrum.

Sasan K. Goodarzi: Yeah, Alex, great, great question. And let me give you just one minute of context.

Alex: Yes, Alex Great Great. Great question, Let me just one minute of context, and then I'll answer your question.

Alex: Based on our estimates we believe the IRS total returns will grow about 1% and the majority of that if not all of that will happen in the do it yourself category. The assisted category is generally flat, which is why we led with the fact that we are taking share with that as context. It actually does not change.

Our long term goalpost.

Sasan K. Goodarzi: And then I'll answer your question. You know, based on our estimates, we believe the IRS total returns will grow about 1%. And the majority of that, if not all of that, will happen in the "do it yourself" category; the assisted category is generally flat, which is why we led with the fact that, you know, we are taking share. With that as context, it actually does not change our long-term goalposts. We want to be able to increase our share of total IRS return. But we also want to get there the right way.

Alex: We want to be able to increase our share of total IRS returns. We also want to get there the right way. So this year I am very comfortable with where we ended up because our entire focus was the assisted segment and high value high.

Average revenue per return filers, but overtime as turbotax live goes from being 30% of our franchise are growing at 17% to being 70% of our franchise and Thats, what youre going to see us start moving the needle on increasing our share of the total IRS returns and by the way I would.

Sasan K. Goodarzi: So this year, I'm very comfortable with where we ended up because our entire focus was the assisted segment and high-value, high average revenue per return filers. But over time, as TurboTax Live goes from being 30% of our franchise, growing at 17%, to being 70% of our franchise, that's when you're going to see us start moving the needle on increasing our share of the total IRS return. And by the way, I would also like this, although it's not directly related to your question, I would like this to the online desktop mix.

Alex: Also like in this although it's not directly at your question I would liken this to the online desktop.

Alex: If you think about the last five to 10 years in small business. We always said that want online becomes more than 50% of small business, and then 60% and 70% over time, because it's growing faster it will actually accelerate the growth rate of the small business group that is exactly what's happened and we believe that same thing will happen in turbotax as turbotax.

Alive goes from 30% to 70% one day and that's what will result in our total share increasing up total IRS.

Sasan K. Goodarzi: If you think about the last five to 10 years in small business, we always said that once online becomes more than 50% of small business, and then 60 and 70% over time, because it's growing faster, it will actually accelerate the growth rate of the small business group. And that is exactly what happened. And we believe that the same thing will happen in TurboTax as TurboTax Live goes from 30% to 70% one day. And that's what will result in our total share of the total IRS. Okay, thank you.

Speaker Change: Okay. Thank you.

Sasan K. Goodarzi: One other point of contact, if I may add, Aleks, it's important to understand that even for the simple filers, there is a customer segmentation that is critical for us to keep in mind. We remain focused on the simple filers through both TurboTax and KarateKarma. What we are not focused on are the simple filers that have a higher propensity to change platforms year after year because we frankly don't think that's a good return on our investments, and there's not an opportunity for us to grow and earn revenue there. So I just wanted to make sure that customer segmentation was also prominent in what you were hearing.

Alex: The one other point of contact if I may add Alex that's important to understand that even on the simple filers.

Alex: There is a customer segmentation that is critical for us to keep in mind.

We remain focused on a simple filers through both turbotax and credit Karma would we are not focused on other simplifies that have a higher propensity to change platform throughout the year, because we frankly don't think that's a good return on our investments.

Alex: The opportunity for us to grow and earn revenue there. So I just wanted to make sure that customer segmentation was also pronounced and what youre hearing.

Speaker Change: Understood. Thank you.

Speaker Change: Very welcome.

David: We'll take our next question from Kirk Materne with Evercore ISI. Please go ahead, your line is open.

Speaker Change: We will take our next question from Kirk <unk> with Evercore ISI. Please go ahead. Your line is open.

Kirk Materne: Yeah, thanks very much. Sasan, can you just touch on MailChimp a little bit? I was kind of curious.

Speaker Change: Yes, thanks very much.

Speaker Change: Thank you just touched upon mail chimp, a little bit of I was kind of curious.

Speaker Change: What's your thought is.

For the business into the back half of the year given.

Speaker Change: The fact that I think some people sent on the small business side cutting back on sort of go to market is often a place they might look to trim can you just talk about sort of what youre seeing there and what gives you confidence that perhaps this is an opportunity for you guys to take share in that area. Thanks.

Sasan K. Goodarzi: Yeah, great, great question. You know, first of all, I'll reiterate what you heard from us earlier. The fact that revenue decelerated was primarily because we're lapping a big price increase and some lineup changes from last year. But the fundamental health of the businesses is consistent with what it was last quarter.

Kirk Materne: [inaudible] Yeah, great, great question.

Speaker Change: Yes, great Great question first of all I'll reiterate what you heard from US earlier. The fact that revenue decelerated was primarily because we are lapping a big price increase and some lineup changes from last year. The fundamental health of the businesses is consistent with what it was last.

Sasan K. Goodarzi: So that's number one. Number two, our durable focus remains the same, which is we are integrating Mailchimp and QuickBooks. I'd be happy to talk about that more if there are questions about it. Two, the mid-market. Third, international. And we're being really, very aggressive in international. In fact, I was just in London and spent time with our new leader in Mailchimp that leads EMEA, who came from another company where he built really a large international business.

Quarter, So thats number one number two our our durable focus remains the same which is we.

Speaker Change: We are integrating our mail chimp and Quickbooks I'd be happy to talk about that more.

Speaker Change: <unk> about it to mid market third international and we're being really very aggressive.

International in fact, I was just most recently in London and spend time with our.

Speaker Change: New.

Speaker Change: Leader and mail channels at least EMEA that came from another company, where he has built.

Speaker Change: Really a large international business and to visit a number of customers and partners and we're being very aggressive with our approach in what we've done with the platform what we're doing with our pricing and then the marketing investments that we are making as we as we look ahead and in fact.

Sasan K. Goodarzi: And two, this is a number of customers and partners, and we're being very aggressive with our approach in what we've done with the platform, what we're doing with our pricing, and then the marketing investments that we are making as we look ahead. In fact, as I mentioned earlier, there are five areas where we are accelerating our investments. This is one of them. And so we're quite excited about the possibilities given the green shoots that we're seeing.

Speaker Change: I mentioned earlier, there are five areas, where we are accelerating our investments.

Speaker Change: This is one of them and so we're.

Speaker Change: We're quite excited about the possibilities given the green shoots that we're seeing.

Speaker Change: Thanks Hassan.

Speaker Change: Very welcome.

David: We'll take our next question from Kash Rangan with Goldman Sachs. Please go ahead, your line is open.

We will take our next question from Kash Rangan with Goldman Sachs. Please go ahead. Your line is open.

Kasthuri Gopalan Rangan: Thank you very much so far still remain the best predictor of small business you've got the best leads.

Kasthuri Gopalan Rangan: got the best read. And I'm curious; you said green shoots. I speak by that observation. And in a macro environment, which gets tougher, you guys have shown the ability to execute really well. So, what are the other things in your toolkit that you have been able to unpack that if the macro environment continues to stay where it is, what are the things that can help Intuit continue to outperform people's expectations for the small business segment? Thank you so much. Congratulations!

Speaker Change: I am curious, what you said green shirt.

Speaker Change: Good observation.

Speaker Change: And.

Speaker Change: In a macro environment, which gets tougher.

Speaker Change: The ability to execute really well what are the other thank you.

Speaker Change: But you have been able to unpack that if the macro unbalanced continues to stay where it is.

Speaker Change: One of the things that helped them to continue to outperform.

Speaker Change: But the expectations for the small business segment. Thank you so much and congrats.

Sasan K. Goodarzi: Thank you, and it's great to hear from you. One of the fundamental execution philosophies that we have at the company is conviction in the long term, ambitious testing, and experimentation in the short term so that we can be nimble, we can learn, and we can adjust. And really, the answer to your question is the five areas that you heard that we're accelerating our investments. I mean, we are seeing green shoots with our learnings and insights with Intuit Assist, and we're accelerating our investments in GenAI.

Speaker Change: Yes, Thank you and great to hear from you.

One of our fundamental execution philosophies that we have at the company is conviction on the long term ambitious testing and experimentation in the short term. So that we can be nimble, we can learn and we can adjust and really the answer to your question is the five areas that you heard that.

Speaker Change: We're accelerating our investments I mean, we are seeing.

Speaker Change: Seeing green shoots with our learnings and insights with Intuit assessed and we're accelerating our investments in Gen II.

Speaker Change: We as I talked about earlier for the first time, we are increasing our share in the assisted segment and so we're accelerating a number of areas with Turbotax live we're also embedding.

Sasan K. Goodarzi: As I talked about earlier, for the first time, we're increasing our share in the assisted segment, and so we're accelerating a number of areas with TurboTax Live. We are also embedding an expert within QuickBooks Live within our entire small business platform, where every offering will actually come with an embedded expert because we believe, based on the green shoots that we've seen, that will improve conversion. It will also improve retention.

Speaker Change: An expert within Quickbooks live within our entire small business platform. Our every offering will actually come with an embedded expert because we believe based on green shoots that we've seen that that will improve conversion it will.

Speaker Change: Also improve retention and in mid market.

Sasan K. Goodarzi: And the mid-market. I mean, we have been really aggressive in building out capabilities in the platform. We have been aggressive in building out our customer-facing capabilities from leadership all the way down to our frontline sales folks, and we're seeing great green shoots there to accelerate not only growing with our customers but hunting for new ones. And as you know, the mid-market is not just about getting the customer. It's all the services that come with it.

Speaker Change: We have been really assertive in building out capabilities in the platform, we have been asserted and building out our customer facing capabilities from leadership, all the way down to our frontline.

Speaker Change: Folks and we're seeing a great green shoots there to accelerate not only growing with our customers, but hunting for four new ones and as you know mid market is not just about getting the customers all of the services that comes with the payments payroll.

Sasan K. Goodarzi: Payments, payroll, and live platform capabilities. So, Cassie, those are, you know, Cash, those are the, I would say, key green shoots that we are seeing, all of which we are accelerating our investments currently, by the way, in the quarter and as we head into next year. Fantastic.

Speaker Change: <unk> platform capability so those.

Speaker Change: Those are.

Cash those are the I would say key.

Speaker Change: Green shoots that we're seeing all of which we are accelerating our investments in <unk>.

Speaker Change: Currently by the way in the quarter and as we head into next year.

Kasthuri Gopalan Rangan: Fantastic. Thanks. Glad to share that.

Speaker Change: Fantastic, Thanks, sorry to hear that.

Speaker Change: Thank you.

David: We'll take our next question from Brad Reback with Stiefel. Please go ahead. Your line is open.

Speaker Change: We will take our next question from Brad Reback with Stifel. Please go ahead. Your line is open.

Brad Robert Reback: Great, thanks very much. Sasan, as you sort of think about the overall economic environment, you did a great job there with Cash's question, but for the first time, I think, as long as you've provided the data, payroll.

Speaker Change: Great. Thanks very much.

Ron: Ron as you sort of think about the overall economic environment.

Speaker Change: Great job there with cashiers question, but for the first time I think as long as you've provided the data payroll wasn't the number one growth driver.

Brad Robert Reback: You've provided the data. Payroll wasn't number one.

Speaker Change: On the the.

Speaker Change: The online ecosystem. So maybe you can dig in there and give us a little sort of color on what's going on within the payroll business and if we should expect growth to continue to moderate there. Thanks.

Brad Robert Reback: [inaudible]

Speaker Change: Sure well, let me, let me start actually with the.

Speaker Change: What we're seeing on our platform with respect to the health.

Sasan K. Goodarzi: Sure. Well, actually, let me start with what we're seeing on our platform with respect to the health of small businesses, if I could just do that for a moment. One of the things that we are seeing, if we look back from today versus, you know, the last three to four months, we're actually seeing some improvement in the profitability of small businesses on our platform. And that's a good sign compared to the last couple of years.

Speaker Change: The health of small businesses, if I could just do that for for a moment what are the things that we are seeing if we look back from today versus the last three to four months, we're actually seeing some improvement in profitability of small businesses on our platforms.

Speaker Change: That's a good sign when compared to the last couple of years now within that.

Sasan K. Goodarzi: Now, within that, depending on the sector that you're in, your performance is driven by the environment. And so, for instance, manufacturing, areas like manufacturing, professional services, auto repair, their profits are actually up nearly 20%, whereas real estate, lending, their profits are actually down 15%. So, the net of it is that overall, we've seen improvement. However, depending on the sector that you're in, your performance varies. But the net of all of that is that cash reserves are down 8% compared to this time last year but up over 16% compared to pre-COVID.

Speaker Change: Depending on the sector that you are in your performance is driven by the environment and so for instance manufacturing.

Speaker Change: Areas like manufacturing professional services auto repair their profits are actually up nearly 20% were real estate lending their profits are actually down 15%. So the net of it is overall, we've seen improvement depending on the sector that you are in your performance varies but the net of all of that.

Speaker Change: Is that cash reserves are down 8% compared to this time last year, but up over 16% compared to pre COVID-19. So what you should take away is small businesses are healthier.

Sasan K. Goodarzi: So, what you should take away is small businesses are healthier, but their cash reserves have been impacted. And for those that have been on our platform for over four years, their cash reserves are over 60% higher than those that have only been with us for a year. Last thing I would just say is that hours worked are actually up compared to the last quarter. Specific to your payroll question, let me ask Sandeep to answer specifically what you asked about payroll.

Speaker Change: But their cash reserves had been impacted and for those that are on our platform by the way over four years, where cash reserves are over 60% higher than those that have only been with us for a year last thing I would just say is hours worked is actually up compared to the last quarter specific to your payroll question, Let me ask Sandeep <unk>.

Speaker Change: To answer specifically asks about payroll.

Sandeep Singh Aujla: Brad, as I mentioned in my prepared remarks, we continue to see customers in our payroll business adopting our solutions. They continue to take our higher-end offerings as well. The reason for the difference you called out is a point to the payments business, where the charge volume went to 22% growth in the quarter versus 20% growth in the prior quarter.

Speaker Change: As I mentioned in my prepared remarks, we continue to see customers in our payroll business adopting our solutions. They continue to pick our high end offerings as well the reason for the difference.

Speaker Change: You've called out.

Speaker Change: To the payments business, where the charge volume went to 22% growth in the quarter versus 2000, the prior quarter. So thats the key.

Sandeep Singh Aujla: So that's a key item to call out in that sequencing. Perfect. Thank you.

Speaker Change: The item to call out in that sequencing.

Brad Robert Reback: Perfect, thank you very much.

Speaker Change: Perfect. Thank you very much.

Speaker Change: Very welcome.

David: We'll take our next question from Brad Zelnick with Deutsche Bank. Please go ahead, your line is open.

Speaker Change: We will take our next question from Brad.

Speaker Change: Brad Zelnick with Deutsche Bank. Please go ahead your line is open.

Brad Alan Zelnick: Oh, excellent. Thank you so much for taking the question. Sasan, it's great to hear about your strong performance in post-service this season.

Brad: Excellent. Thank you so much for taking the question. So John it's great to hear about the strong performance in foodservice. This season can you double click into which assisted filers you feel you did a good job, capturing which might've been a little bit more resist resisting than your expectation.

Brad Alan Zelnick: will click into which assisted filers you feel you did a good job capturing, which might have been a little bit more.

Brad Alan Zelnick: It's a lot more about just resisting than your expectations and how you think about driving momentum in full service going forward.

Speaker Change: Do you think about driving momentum.

Speaker Change: Full service going forward.

Sasan K. Goodarzi: Yeah, Brent, great question. I was actually in San Diego all day yesterday with the TurboTax team doing deep dives on all of these adorable priorities. One of them was full service. You know, first of all, I would tell you that across all of the states, across different income levels, across all complexities, very consistent.

Brian: Yes, Brian Great question I was actually in San Diego, All day yesterday with with the Turbotax team doing deep dives on all of these durable priorities. One of them was full service first of all I would I would tell you that across all of the states.

Brian: Cross different income levels.

Brian: Across all complexities very consistent.

Sasan K. Goodarzi: And I would say that if you heard, not if you heard, if you reflect back on what I said in the remarks, that our new customers in full service tripled, an outsized element of that was those that are sort of younger than millennials, and they are actually embracing full service as a cohort more than others. Not by an incredible amount, but it stands out for us. So I think what we learned, and that's a big deal, by the way, what we learned is that we were successful in just one area.

Brian: And I would say that if you heard.

Brian: Not if you heard if you reflect back on what I said.

Brian: And the <unk>.

Brian: Remarks that our new customers in full service tripled.

Brian: Outsized element of that.

Brian: Those that are sort of younger than millennials and they are actually embracing full service as a cohort more than others not by an incredible amount, but it stands out for us. So I think what we learn.

Brian: And that's a big deal about it but what we learned is we were successful just in one area, but I will tell you the biggest area we're constructively dissatisfied.

Sasan K. Goodarzi: But I'll tell you the biggest area we are constructively dissatisfied with when you look at our overall assisted performance. We were very aggressive with our go-to-market, and not just spend, but the beginnings of being able to recommend an expert, the beginnings of when you search for a local expert, us showing up. There's a lot of infrastructure that we built. We drove a lot of traffic to our front doors. Where we are constructively dissatisfied is that we have to work on our shopping experience.

Brian: When you look at our overall assisted performance we were very aggressive with our go to market and that's just fine.

Brian: But the beginnings of being able to recommend an expert the beginnings of when you search for a local expert us showing up.

Brian: There's a lot of infrastructure that we built we drove a lot of traffic to our front doors.

Brian: We are constructively dissatisfied as we have to work on our shopping experience when you walk into somebody's firm.

Sasan K. Goodarzi: When you walk into somebody's firm, a store, or somebody's home to have them do your taxes for you, you're not presented with a set of SKUs. You just go in there, and you exchange documents, and they do your taxes for you.

Brian: Store or somebody's home to have them do your taxes for you you are not presented with a set of Skus you just go in there and in your exchange documents and they do their taxes for you our shopping experience has to be improved and that's where we saw the biggest drop off so we have a lot of confidence in as the demands that we created and by the way the performance.

Sasan K. Goodarzi: Our shopping experience has to be improved. That's where we saw the biggest drop-off. So what we have a lot of confidence in is the demand that we created, and by the way, the performance. But the demand that we created was exceptional. We need to get better at the shopping experience, and that's one of the areas where, by the way, we saw this during the season, and there's a lot of work that's being done to actually leverage AI to personalize the experiences so that when we get a customer that comes in that comes from an assisted method, they're actually greeted by an expert versus being greeted with, "Which SKU do you want to

Brian: But the demand that was created was exceptional we need.

Brian: Need to get better at the shopping experiences and that's one of the areas where we saw this during the season and there's a lot of work that's being done to actually leverage AI to personalize the experience so that when we get a customer that comes in it comes from an assisted method, where theyre actually read it by an expert versus greeted with would skew do you want to pick.

Brad Alan Zelnick: Thank you so much from the college, Sasan. Yeah, you're very welcome.

Speaker Change: Thank you so much for the color so far.

Speaker Change: Very welcome.

David: We'll take our next question from Steve Enders with Citi. Please go ahead. Your line is open. Okay, great. Thanks for taking the questions here.

Steven Lester Enders: We'll take our next question from Steve Enders with Citi. Please go ahead. Your line is open. Okay, great. Thanks for taking the call.

Speaker Change: We will take our next question from Steve Enders with Citi. Please go ahead. Your line is open.

Okay, great. Thanks for thanks for taking my questions here.

Speaker Change: <unk>.

Maybe just to start off I want to ask about the AI and the assistant.

Speaker Change: AI and intuitive solution.

Speaker Change: In a market I guess.

Speaker Change: What are kind of the proof points that you've seen or how does that kind of manifesting in kind of improving experience are driving monetize able outcomes for for <unk>.

Speaker Change: Intuit so far.

Steven Lester Enders: Yeah, Steve, thank you for the question. I'm actually pleased with our progress, and I'll share some of the proof points. And I will also just remind us that we're still in the early days, but a lot has changed in the last three months. So let me share what those are.

Speaker Change: Yes, Steve. Thank you for the question I am actually.

Speaker Change: Pleased with our progress and I'll share some of the proof points and I'll also just remind us we're still in the early days, but.

Speaker Change: A lot has changed in the last three months. So let me share what those are.

Speaker Change: First of all in Turbotax 24 million customers.

Speaker Change: Used intuit assist them better understand their refund outcome.

Speaker Change: And to be able to get their questions answered and not just the customer but intuitive.

Sasan K. Goodarzi: First of all, in TurboTax, 24 million customers used Intuit Assist to better understand their refund outcome and to be able to get their questions answered. And not just the customer, but Intuit Assist helped our experts be much more efficient and effective in helping our customers. And as you can imagine, we would not have rolled that out to 24 million folks if it wasn't accretive to conversion. In the past, we were always able to use your data to deliver personalized experiences for you, in this case, personalized cards that are right for you, but now we can have a conversation with you and help you understand why one is better than the other. That's one huge element.

Speaker Change: Help our experts to be much more efficient and effective in helping our customers and as you can imagine we would not have rolled that out to 24 million folks is that was that accrete.

Sasan K. Goodarzi: The other is to help you make financial decisions, help you understand how to build your credit, help you understand how to better save money, and help you understand which cards are best to use and which cards you should reduce your utilization on. That's what we've rolled out. And again, as you can imagine, we would not have rolled that out to almost 20 million Credit Karma members if it wasn't accretive to better monetization. And then, you know, the last couple of examples that I would use are on the small business side, where in MailChimp, nearly 300,000 customers have Intuit Assist available to them, particularly and specifically around personalized marketing campaigns, where we help you put a campaign together, with images, text, et cetera.

Speaker Change: Accretive to conversion the second is credit Karma and credit Karma, we have over 40 million monthly active users and we have rolled out intuit assist capabilities and I'll share what those are in a moment.

Speaker Change: To nearly half of our 40 million monthly active users.

Speaker Change: And and what we have rolled out.

Speaker Change: The following things one.

Speaker Change: To help you make a decision and so by the way if if if any of you on the call are credit Karma users and you happen to have unless you are in a hold outs out youll be able to see everything that I'm articulating.

Speaker Change: So you will see things like.

Speaker Change: Intuit assist that and it will show you see why see comparisons let me help you and when you engage it helps you actually understand and have a conversation about which card is right for you in the past, we always were able to use your data to deliver personalized.

Speaker Change: <unk> for you in this case personalized cards that are right for you, but now we can have a conversation with you and help you understand why one is better than the other.

Speaker Change: One huge element. The other is helping you make financial decisions help you understand how to build your credit help you understand how to better save money help you understand which card are best to use and which card you should reduce your utilization that's what we've rolled out and again as you can imagine we would not have rolled in alcohol.

Speaker Change: Almost $20 million credit card members, they will if it wasn't accretive to better monetization.

Speaker Change: And then the last couple of examples that I would use is on the small business side, where and mail chip.

Speaker Change: Nearly 300000 customers have intuitive available to them, particularly in specifically around personalized marketing campaigns.

Sasan K. Goodarzi: And across the QuickBooks platform, we have capabilities available to nearly 30,000-ish customers, and the capabilities are really about turning unstructured data into money and personalized feeds. What that means is taking your email, as an example, and taking everything that's in your email and turning it into an invoice that's paper and labeled so that you can get paid faster, and that's a monetizable event for us. And then business feeds that help you orient to what's the most important insight for the day, which, ultimately, depending on what you engage with, is a monetizable event for us.

Speaker Change: Can we help you put a campaign together images tax et cetera, and in across the Quickbooks platform.

We have capabilities available to nearly 30000 ish customers and the capabilities is really about turning unstructured.

Speaker Change: Data into money.

Speaker Change: And personalized fee what that means is.

Speaker Change: Taking your E mail as an example, and taking everything thats in your email and turning it into an invoice payment enabled so that you can get paid faster and better monetize it'll event for US and then business feeds that helps you Orient to what's most important insight for the day, which ultimately depending on what you engage with is it monetize it.

Sasan K. Goodarzi: So we've made a lot of progress in the last 90 days, and we're even more hopeful about what's possible in the future. I'll just end by saying that it's early days, but it's amazing the progress that the team has made in the last 90 days.

Speaker Change: All of that for us. So we've made a lot of progress in the last 90 days.

Speaker Change: And we're even more hopeful about what's possible in the future I will just add it's early days, but it's amazing the progress of the team has made in the last 90 days.

Speaker Change: Okay, great to hear thanks for the context there.

Yes, very welcome.

David: We'll take our next question from Brad Sills with Banks of America. Please go ahead, your line is open. Oh, great. Thank you so much.

Speaker Change: We will take our next question from Brad Sills with Bank of America. Please go ahead. Your line is open.

Bradley Hartwell Sills: I wanted to ask a question about TurboTax full service. I know it's been a couple of seasons now under your belt here. What are some of the areas that you've learned from? What are some of the areas that you've outperformed with full service? What are some of the learnings from a couple of tax seasons now under your belt? And what have you identified for the future in order to target that segment more aggressively? Thank you.

Bradley Hartwell Sills: Oh, great. Thank you so much I wanted to ask a question around Turbotax full service I know, it's a it's been a couple of seasons now under your belt here what are some of the areas that you've learned from what are some of the areas you've outperformed with full service what are some of the learnings from a couple of tax seasons now under your belt and what have you identified for the future in order to target that.

Speaker Change: Segment.

Speaker Change: More aggressively thank you.

Sasan K. Goodarzi: Yeah, Brad, thank you for your question. You know, first of all, I would say this actually was the first real season with full service.

Speaker Change: Yes, Brian. Thank you for your question first of all I would say this actually was the first real season was full service last year. It was still although we rolled that out it was still at the experiment experiments level.

Speaker Change: With that said that to answer your question a couple of things one because we were quite aggressive with our go to market.

Speaker Change: We learned that we can create a lot of demand and we create a lot of demand not only by talking about the fact that we can do your taxes and less than a day.

Sasan K. Goodarzi: Last year, it was still, although we rolled it out, it was still at the experiment level. With that said, Steve, to answer your question, a couple of things. One, because we were quite aggressive in our approach to the market, we learned that we could create a lot of demand. And we created a lot of demand, not only by talking about the fact that we can do your taxes in less than a day, but we can help extend your money and give you early access to or immediate access to your money. But there is a lack of price transparency in the entire assisted segment, where you don't really know what you're going to pay until you walk into somebody's store or firm.

Speaker Change: We can help extend your money and give you early access or immediate access to your money.

Speaker Change: There is a lack of price transparency and the entire assisted cycle, where you don't really know what youre going to pay until you walk into somebody's store or a firm and we did a lot of testing to understand how important our prices we learned that it matters a lot and so we created a lot of demand that's number one number two.

Sasan K. Goodarzi: And we did a lot of testing to understand how important price is. We learned that it matters a lot. And so we created a lot of demand. That's number one. Number two, when you search locally for an expert, and or if we showed you when you engage with full services, there's an expert near you, the conversion rates were significantly higher than when we didn't so often search. And that, by the way, is just an element of time.

Speaker Change: When you searched locally for an expert or and or if we showed you and.

Speaker Change: When you engage with full services as an expert in year you. The conversion rates were significantly higher than when we didn't show up in search and that by the way is just a an.

Speaker Change: Elements of time, we will be able to get all of what we were doing this year rolled out.

Speaker Change: Across all of our customers, but that's an enormous learning that local matters people want to be able to search for April near me.

Folks want to know that they are expert is nearby.

Speaker Change: We saw significant expert or conversion lift last thing that we saw as a great proof point is.

Speaker Change: I think this was more towards the middle towards the end of season, you could recommend your expert that had a big conversion lift, but we were not able to scale that for the entire season or to all of our customers, which we plan to next year. So those are the big insights in the big learnings and lastly, I'll just end with the following which is what I mentioned a moment ago.

Sasan K. Goodarzi: We'll be able to get all of what we did this year rolled out across all of our customers, but that's an enormous learning lesson, that location matters. People want to be able to search for a pro near them. Folks want to know that their expert is nearby. And we saw significant experts or a conversion list. The last thing that we saw as a great proof point is, I think this was more towards the middle, towards the end of the season, you could recommend your expert. That had a big conversion list.

Speaker Change: We have a lot of work to do on our shopping experience and to simply put it when.

Speaker Change: When you walk into somebody's firm or store Youre not presented with a skew in our lineup you just walk in and get have them get your taxes done.

Speaker Change: And Thats, what we are working on which is in essence, when you pick full service youre greeted by the expert versus our pricing lineup to make a choice and that with an enormous learning. This year all of US. We are currently working on for next year that gives us a lot of confidence.

Speaker Change: Very clear thanks, Bob.

Speaker Change: Yes, Youre very welcome.

Sasan K. Goodarzi: But we were not able to scale that for the entire season or to all of our customers, which we plan to do next year. So those are the big insights and the big learnings. And last, I'll just end with the following, which I mentioned a moment ago.

Speaker Change: We'll take our next question from Scott Schneeberger with Oppenheimer. Please go ahead. Your line is open.

Sasan K. Goodarzi: We have a lot of work to do on our shopping experience. And to simply put it, when you walk into somebody's firm or store, you're not presented with a SKU and a line. You just walk in and have them get your taxes done. And that's what we are working on, which is, in essence, when you pick full service, you're greeted by an expert versus a price lineup to make a choice. And that was an enormous learning experience this year, all of which we're currently working on for next year that gives us a lot of confidence.

Bradley Hartwell Sills: Very clear. Thanks, Sasan.

Scott Andrew Schneeberger: Thank you very much good afternoon.

Speaker Change: This is primarily on turbotax on do it yourself and Turbotax I think I heard sandeep say that overall consumer retention or turbotax retention with three points.

Speaker Change #100: Yes, there was some share loss, obviously on the low end and seemingly in do it yourself the full service metrics and overall Turbotax live sound great. So I think we have good retention there good new customer acquisition, but in the in the do it yourself.

Speaker Change #100: In the paid customer.

Speaker Change #101: Are you are you doing okay in share there.

Speaker Change #102: What are you doing in that category, specifically paid do it yourself to to build share going forward because when you answered Alex's question earlier about about growing share it sounded all like in the assisted category and Thats, great great opportunity, but just curious in the in the paint category to DIY.

Speaker Change #103: What's your what's your opportunity there going forward. Thanks.

Sasan K. Goodarzi: Yeah, you're very welcome.

Speaker Change #104: Yes. Thank you for the question Sandeep, Please feel fair to think about.

David: We'll take our next question from Scott Schneeberger with Oppenheimer. Please go ahead, your line is open.

Bill: Bill I would say that overall, we feel good about our pay chair because if you if you and we've cut at multiple different ways internally, but if you look at what we've shared in our remarks.

Scott Andrew Schneeberger: and TurboTax. I think I heard Sandeep say that overall consumer retention or TurboTax retention was three points, yet there was some share loss, obviously on the low end and seemingly in the do-it-yourself segment. The full service metrics and overall TurboTax five sound great, so I think you have good retention there, and good new customer acquisition. But in the do-it-yourself, the paid customer, are you doing okay in share there, and what are you doing in that category specifically, paid do-it-yourself, to build share going forward? Because when you answered Alex's question earlier about growing share, it sounded all like in the assisted category, and that's great. It's a great opportunity. But just

Bill: Total IRS grew 1% our total paying customers grew 2% and our retention grew three points. So we actually feel good about our paying share I think what you heard us remark on is where we lost share, which we're okay with because it was actually an intentional focus on the things that we've talked.

Sasan K. Goodarzi: Yeah, thank you for the question, and Sandeep, please feel free to build on this. I would say that overall, we feel good about our paid share because, and we've cut it multiple different ways internally, but if you look at what we've shared in our remarks, total IRS grew 1%, our total paying customers grew 2%, and our retention grew 3 points. So we actually feel good about our paying share. I think what you heard us remark on is where we lost share, which we're okay with, because it was actually an intentional focus on the things that we talked about today, which were customers that are, in essence, Simplifiers that are bouncing between platforms, and that's the area where we articulated earlier that we lost share. So that's the way I would have you think about our performance: when it comes to paying share, we actually feel good about our performance. Scott, I would also add that you should

Bill: Today was on customers that are in essence.

Bill: Simple filers that are bouncing between platforms.

Bill: And that's the area, where we articulate earlier that we lost share. So that's the way I would have you think about our performance is when it comes to paying share we actually feel good about our performance.

Sandeep Singh Aujla: Scott, I would also add that you should not take away that we are yielding any grant on the paying DIY customers. Through our marketing investments, we are focused on attracting those customers to our platform. Our AI experiences are helping those customers better understand their returns and gain better confidence, leading to better conversion, and we remain relentlessly focused on improving the product experience for those customers. So, in addition to the assisted category, which we are excited to disrupt the $31 billion market across consumer and small business, we are also focused on making sure it was a paying DIY customer.

Scott Andrew Schneeberger: And Scott I would also add that you should.

Scott Andrew Schneeberger: Not takeaways that we are yielding any ground underpinned.

Scott Andrew Schneeberger: <unk> customers, our marketing investments, we are focused on attracting both customers to our platform.

Scott Andrew Schneeberger: Experiences are helping those customers better understand their returns again, better confidence leading to better conversion and we remained relentlessly focused on improving our product experience for those customers. So.

Scott Andrew Schneeberger: In addition to the assisted category, which we are excited through December $31 billion market across consumer and small business. We also are focused on taking share it was a pain DIY customer.

Speaker Change #106: Great. Thank you both.

Scott: You're very welcome Scott.

David: We'll take our next question from Raimo Lenschow with Barclays. Please go ahead. Your line is open.

Speaker Change #107: We will take our next question from Raimo <unk> with Barclays. Please go ahead. Your line is open.

Raimo Lenschow: Thank you. Sasan, you talked earlier in the prepared remarks about desktop and the changes here in the coming year. Can you kind of link that up maybe a little bit with what we've seen in QuickBooks Advanced and how there's kind of more opportunity to bring desktop guys over and what you're seeing there on both? Thank you.

Speaker Change #108: Thank you.

Speaker Change #109: You talked earlier in the prepared remarks about desktop.

Speaker Change #110: The changes here in the coming year can you kind of looked at may be mitigated.

Speaker Change #111: <unk> and Quickbooks advanced.

Speaker Change #111: Yes.

Speaker Change #112: Just kind of more opportunity to bring desktop guys over and what you're seeing on both thank you.

Sasan K. Goodarzi: Sure. Let me thank you for the question and let me answer your question. But if I'm not answering your question directly, please ask it again.

Speaker Change #113: Sure Let me thank you for the question.

Speaker Change #114: Let me answer your question, but if I'm not answering your question directly. Please come at me again, I think what you heard US talk about earlier is one we've been in the middle of a business model shift and moving all of our desktop customers to subscription.

Speaker Change #114: And at the same time, we've been building capabilities on our online platform for essentially all of our desktop customers have a destination, which is online and we believe over time all of our desktop customers at one point will be on our online platform.

Sasan K. Goodarzi: I think what you heard us talk about earlier is, one, we've been in the middle of a business model shift moving all of our desktop customers to subscriptions, and at the same time, we've been building capabilities on our online platform. So eventually, all of our desktop customers have a destination, which is online. And we believe, over time, all of our desktop customers will be on our online platform at some point. With that said, the thing that I would say is that we've really built out a lot of our capabilities in QuickBooks Advanced.

Speaker Change #114: With that said the thing that I would say is that we've really built out a lot of our capabilities on quickbooks advanced and in fact, we are aggressively building a number of capabilities that will be excited to talk to all of you about at Investor day really targeting even our larger customers and I think it will be far better positioned.

Speaker Change #114: <unk> to take on some of our larger enterprise customers that may choose to want to come to our online platform and that's really the essence of what we were talking about earlier is as you think about the growth are.

Speaker Change #114: Desktop franchise looking ahead, one we have desktop enterprise that's growing high single digit number two.

Sasan K. Goodarzi: And in fact, we are aggressively building a number of capabilities that we'll be excited to talk to all of you about at Investor Day, really targeting even larger customers. Number two, we believe that we can get most of our customers over time to go to our online platform. And price to value also plays an important role. And with all that said, I just think we're better positioned for some of our larger customers to come to our QB advanced over time. And that's what really gives us confidence as we look.

Speaker Change #114: We view that we can get most of our customers over time to go through our online platform and some price plays.

Speaker Change #114: Price the value of also plays an important role and with all that said I just think we're better positioned for some of our larger customers that come to our Kiwi advanced overtime and Thats, what really gives us confidence as we look into the future.

Sandeep Singh Aujla: Yeah, let me make a call about that. Okay, sorry. Now I'm just going to add you because this question was also about you.

Yes.

Speaker Change #114: Okay.

Speaker Change #114: Okay.

Sandeep Singh Aujla: Now I was just going to add, because the question was also about just the progress we are feeling about advanced. What I would say across the mid-market, and as I alluded in my prepared remarks, we continue to feel good about the progress we're making with the mid-market, including with QuickBooks Online Advanced and with the Desktop Enterprise product, which grew in the high teens. So that's an area we continue to feel good about.

Speaker Change #114: Okay.

Speaker Change #115: No I'm just going to add.

And it was all about.

Speaker Change #116: Yes, we are feeling about advanced what I would say across the mid market.

Speaker Change #117: I alluded in my prepared remarks, we've continued to feel good about the progress, we're making with the mid market, including cookbooks online advanced and with desktop enterprise product, which grew in the in the high teens. So.

Speaker Change #117: It's an area we continue to feel good about that I would have.

Speaker Change #118: Perfect. Thank you.

Speaker Change #119: Very welcome.

Sasan K. Goodarzi: And we'll take our next question from Taylor McGinnis with UBS. Please go ahead, your line is open. Hi, this is Daniela on behalf of Taylor. Thanks for taking my question.

David: And we'll take our next question from Taylor McGinnis with UBS. Please go ahead, your line is open.

Speaker Change #120: And we will take our next question from Taylor Mckinnis with UBS. Please go ahead. Your line is open.

Daniela: Hi, This is daniela on for Taylor, Thanks for taking my question.

Speaker Change #122: It looks like the small business and social point growth in the quarter was driven by Stifel QTL accounting growth and acceleration in desktop so as we look into our Q, how much of the implied 17% market small business and self of fleet growth is being driven by desktop versus.

Speaker Change #123: The stability of the online segment and given that so many F&B software company incremental pressuring lung can you just comment on what Youre seeing in terms of FMC health and how that is influencing your guide.

Taylor Anne McGinnis: Yeah, sure. Let me get us started, Sandy. Please jump in if you have any perspective to add. I'm not sure I understood the premise of your question, so let me just share what you should take away. What you should take away is the strength of our small business franchise is being driven by our online performance. Overall, it grew 18 percent. Our online performance actually grew 19 percent. Our services grew 20 percent.

Speaker Change #124: Yes, sure let me, let me get US started as Andy please.

Speaker Change #125: Please jump in if you have any perspective to add.

Speaker Change #126: I'm not sure I understood. The premise of your question. So let me let me just share what you should take away. What you should take away is the strength of our small business franchise is being driven.

Speaker Change #126: By our online performance overall it grew 18% are our online actually grew 19% our services grew 20% and we actually feel very good about the trajectory of the business.

Sasan K. Goodarzi: We actually feel very good about the trajectory of the business. And as we talked about, you know, as we look ahead, we believe that desktop will continue to grow once the business model shift comes to an end. But that continued growth will come from the fact that half of desktop is enterprise, and it's growing high. We expect it to grow in the high single digits. But the takeaway should be that in a macro environment that is somewhat uncertain, our online performance for small business has been quite strong and very resilient.

Speaker Change #126: And as we talked about as we look ahead, we believe that desktop will continue to grow once the.

Speaker Change #126: Our business model shift comes to an end, but that continued growth will come from the fact that half of desktop is enterprise and it's growing high we anticipated to grow high single digits, but the takeaway should be that in a macro environment that is somewhat uncertain.

Speaker Change #126: Our online performance for small business has been quite strong very resilient and we're actually seeing a lot of engagement and usage by our customers.

Sasan K. Goodarzi: And we're actually seeing a lot of engagement and usage by our customers just because it's really helping them manage their cash flow. It's helping them grow their business. And I think we're very well positioned in this environment.

Speaker Change #127: Just because it's really helping them manage their cash flow is helping them grow their business and I think we're very well positioned in this environment and what I would add in addition to <unk> comments about the health of the F&B market is a reminder, that 80% of our small business groups revenue is subscription based and when you look at those businesses. The part of their business that is not related to subscription.

Sandeep Singh Aujla: And what I would add, in addition to Sasan's comments about the health of the S&B market, is a reminder that 80% of our small business groups' revenue is subscription-based. And when you look at those businesses, the part of the business that is not related to subscription, largely on our services side, there are a couple of factors to underline. We saw our payments charge volume increase 22% in Q3, which was faster than what we saw in Q2.

Speaker Change #128: <unk> largely on our services side couple of factors just to underlying we saw our payments charge volume increased 22% in Q3, which was faster than what we saw in Q2, and we continue to see good adoption of our pillar offerings bike customers as well as a mix shift towards the higher enough to apparel offerings.

Sandeep Singh Aujla: And we continue to see good adoption of our payroll offerings by customers, as well as a mixed shift towards the higher end of the payroll offerings. So heading into Q4, we feel good about our online ecosystem growth, which remains our growth catalyst going into the future.

Speaker Change #128: So heading into Q4, we feel good about our online ecosystem growth, which remains a growth catalyst going into the future.

Speaker Change #129: Perfect. Thanks.

Speaker Change #130: Youre very welcome.

David: We'll take our next question from Michael Turrin with Wells Fargo. Please go ahead. Your line is open. Hey, great. Thanks. I appreciate you fitting me in.

Speaker Change #131: We will take our next question from Michael <unk> with Wells Fargo. Please go ahead. Your line is open.

Michael James Turrin: The small business segment growth is holding in strong, if we look at the international online ecosystem revenue growth trailing at 12% in constant currency. Are there any plays you see to potentially jumpstart overseas growth? Is there anything you're experimenting with around Mailchimp that could help with the tip of the spear there into broader international reach? Or what else do you see that yields potentially better growth down the line?

Speaker Change #132: Okay. Great. Thanks. Appreciate you fitting me on the small business segment growth is holding in strong if we look at the international online ecosystem revenue growth trailing 12% in constant currency.

Speaker Change #133: The other place you see.

Speaker Change #134: Hence, we jumpstart overseas growth is there anything you're experimenting with Royal Mail chimp.

Speaker Change #134: Tip of the spear there into broader international.

Speaker Change #134: National reach or.

Speaker Change #135: What else do you see that.

Speaker Change #136: Potentially better growth down the line. Thanks.

Sasan K. Goodarzi: lapping price increase from last year and some of the lineup changes that we talked about earlier impact international growth, just since 50% of MailChimp's revenue is international. So that was a big driver of why 12%. And two, absolutely. Given the green shoots that we are seeing with MailChimp internationally and where we have product market fit with QuickBooks and MailChimp, one of the five areas that we are accelerating our investments in is, in fact, international. So we're excited about what's possible as we look ahead.

Sasan K. Goodarzi: Thanks. Yeah, thank you for your question. You know, first of all, I'll start with the fact that

Speaker Change #137: Yes. Thank you for your question first of all I'll start with the fact that.

Speaker Change #137: The mail chimp.

Speaker Change #138: Lapping price increase from last year and some of the lineup changes that we talked about earlier impacts international growth just since 50% of <unk> revenue is international so that was a big driver of.

Speaker Change #137: Y 12%.

Speaker Change #137: And two yes, absolutely given the green shoots that we're seeing with <unk> internationally, and where we have product market fit with Quickbooks and mail chimp one of the five areas that we are accelerating our investments is in fact international So we're excited about what's possible as we look at.

Speaker Change #139: Thank you.

Speaker Change #140: Yes, very welcome.

David: I'll now turn the program back to our speakers for any closing remarks, or I do apologize. We will actually take our next question. I apologize again. We were going to take your question from Aleks Zelnick, but they have removed themselves from the queue. I'll return the call to our speakers for any closing remarks.

Speaker Change #141: I'll now turn the program back to our speakers for any closing remarks, alright, do apologize we will actually take our next question.

Speaker Change #142: Alright, I apologize again.

Speaker Change #143: And just take your question from Alex Xie, Nick, but they have removed themselves from Q.

Speaker Change #143: Ill turn the call to our speakers for any closing remarks.

Sasan K. Goodarzi: We'll listen to everybody. Thank you so much for attending. Thank you for your wonderful questions, and we will see you at our next earnings. Be safe. Bye-bye.

Speaker Change #144: Well listen everybody. Thank you so much for attending thank you for your wonderful questions and we will see you at our next earnings be safe Bye Bye.

Operator: This does conclude today's program. Thank you for your participation. This concludes today's call.

Speaker Change #145: This does conclude today's program. Thank you for your participation. This concludes today's call.

Speaker Change #145: [music].