Intuit's Vice President of Investor Relations, Kim Watkins, welcomed everyone to Intuit's fourth quarter fiscal year 2023 conference call. She reminded everyone that their remarks will include forward-looking statements and provided various documents to review for more information. She then introduced Intuit's CEO, Sasan Goodarzi, and the new CFO, Sandeep Aujla, before turning the call over to Sasan.

Intuit had a successful fourth quarter and full year, growing revenue 13% and expanding operating margins. They are guiding for double-digit revenue growth and margin expansion in the upcoming year, despite the uncertain macroeconomic environment. Intuit has invested in their platform, talent, data, and AI, and now in generative AI, to create a future of "done for you" services that will help customers achieve financial success. Intuit has a 360-degree view of their customers and small businesses, giving them access to rich longitudinal, transactional, and behavioral data.

Intuit has made investments in data and AI to create personalized experiences and recommendations for their 500,000 small business customers and 60,000 consumer customers. They recently introduced their generative AI operating system called GenOS to accelerate innovation and create powerful financial LLMs. On September 6th, Intuit will be hosting an Innovation Day virtual event to discuss how these innovations will drive business growth in the future.

The company is making progress with its Big Bets, particularly on its fourth Big Bet of becoming the center of small business growth. This quarter has seen 22% growth in online payment volume and the beta of the native bill pay solution has been expanded 10x. Mailchimp is working on three acceleration priorities, including developing a full marketing automation, CRM and eCommerce suite, and has implemented its first generative AI capability, the Email Content Generator.

This quarter, Mailchimp launched a new product announcement generator and announced over 150 new and updated features. There were also lineup changes and free trials that drove positive trends in year-over-year paid customer growth. The product has also been translated into five different languages. The company delivered strong results in the fourth quarter, with total revenue growth of 12% and GAAP and non-GAAP EPS growth of 15% and 22% respectively. Sandeep Aujla was also on the call to discuss the results.

Intuit's Small Business and Self-Employed Group saw a 21% and 24% growth in revenue in Q4 and the full year, respectively, with four points of benefit from a full year of Mailchimp's revenue this year versus three quarters last year. QuickBooks Online accounting revenue grew 22% in Q4 and 26% in fiscal '23, driven by customer growth, higher effective prices and mix shifts. Online services grew 20% in Q4 driven by payroll, Mailchimp, payments, capital and time tracking, and 34% for the full fiscal year. Mailchimp revenue grew mid-teens in Q4, driven by higher effective prices and paying customer growth. Payments revenue growth in the quarter was driven by customer growth and an increase in total payment volume per customer.

QuickBooks Online and Mailchimp are being used to expand globally, and on a constant currency basis, total international online ecosystem revenue grew 12% in Q4 and 31% in fiscal '23. Desktop Ecosystem revenue grew 19% in the fourth quarter and QuickBooks Desktop Enterprise revenue grew in the low 20s. Prices were raised last September, and the online ecosystem is expected to be the growth catalyst longer-term. Credit Karma delivered revenue of $424 million in Q4, down 11%, mainly due to macroeconomic headwinds in personal loans, auto insurance, home loans and auto loans.

Intuit's Credit Karma revenue represented 11% of total revenue in fiscal '23, with credit cards and personal loans making up nearly 50% and 30% of revenue respectively. The Consumer Group saw 6% revenue growth in fiscal '23 and 10% average annual growth over the past four years, with TurboTax Live growing 17% and customers growing 12%. Intuit is investing in growing TurboTax Live with GenAI and human experts, scaling their business tax offering, and driving Credit Karma members to TurboTax and giving TurboTax filers faster access to their money.

Intuit plans to manage their spending and investments to drive growth, including investing in their Big Bet and GenAI. The Board approved a quarterly dividend of $0.90 per share with a 15% increase. The company's guidance includes total company revenue of $15.89 to $16.105 billion with growth of 11-12%. The Small Business and Self-Employed Group is expected to grow 16-17%, the Consumer Group 7-8%, and Credit Karma is expected to decline 3-3%.

Intuit's CEO, Sasan Goodarzi, concluded the presentation by expressing confidence in the company's AI-driven expert platform strategy and investments in GenAI, as well as its leadership team driving platform innovation. The company expects revenue growth of 10-11% in the first quarter of fiscal '24, with GAAP earnings per share of $0.15 to $0.21 and non-GAAP earnings per share of $1.94 to $2. Intuit also plans to hold an Intuit Innovation Day on September 6th and an Investor Day on September 28th.

Sasan Goodarzi explains that their focus on future growth and bullishness has not changed, and that the shift towards digitization will only accelerate in the years to come. He goes on to explain that they had a breakthrough this past year in terms of customer growth within the Credit Karma platform, and that this gives them a lot of confidence going into next year and beyond.

Intuit had a successful product market fit in the past year and is looking to scale it further. They are also launching a business tax offering on the QuickBooks Live platform and TurboTax, and are focusing on local services. Lastly, they are being prudent with their guidance for the upcoming year given the events of the past year.

Sasan Goodarzi from QuickBooks discusses the feedback they have been receiving from customers in regards to their native bill pay service. He states that the feedback has been better than expected and they are now 10x-ing their beta. He also mentions the broader vision of being the source of truth for small businesses and having capabilities that help them manage their cash flow and employees.

Sasan Goodarzi explains that the IRS return rate is estimated to be down a couple of points due to the pandemic, as many people came to get their stimulus dollars and tax credits. He also notes that this was not taken into account when making the guidance, and that Intuit is excited about the potential innovative opportunities in the future.

Sandeep Aujla explains that Intuit has a process for planning and funding growth initiatives such as Big Bets and GenAI that will help them achieve their goal of 8-12% growth and maintain their operating margin in the upper 30s. He also emphasizes their focus on cost controls and being prudent in their guidance.

Sasan Goodarzi explains that Intuit's growth in the Small Business and Self-Employed sector is coming from customer growth, mix, and to a lesser extent, price. Intuit has a framework to drive the majority of growth from volume and mix, while still focusing on pricing for value. This is on top of the 3.5 points of expansion they have achieved in the past three years.

Mailchimp has a platform and portfolio of services that they are driving further adoption of, including payments, payroll, time tracking, Bill Pay, and digitizing B2B. They are just beginning to penetrate the mid-market, and they have a growth algorithm of 10-20% ARPC and customer growth. They are continuing to innovate their platform to open up opportunities for cross-selling and upselling customers.

Sasan Goodarzi discusses the health of small businesses and consumers in the current environment. He states that small business cash reserves are 90% of what they were this time last year, but still stronger than pre-pandemic. He also mentions that small businesses are able to find the labor they need, but certain sectors such as transportation, real estate, and advertising are very weak. Lastly, Goodarzi speaks about Credit Karma and how it is doing.

Sasan Goodarzi answered a question from Brad Reback about whether the long-term growth rate of Credit Karma is meaningfully different in a world with mid-single digit interest rates compared to zero. Goodarzi said that they are still very bullish on the business and that the growth rate should not be significantly impacted. He also mentioned that credit scores are down 13 points on average since last March, credit balances are up 30%, and Gen Z balances are up 45% year-over-year, indicating that people still have jobs but there is a certain level of strain on the consumer.

Credit Karma's monetization model relies on the number of members and their frequency of engagement, and this past year, despite a downturn, their engagement frequency was higher than the prior two years due to innovation. With the integration of TurboTax, the platform is more sticky and has more monetization potential. As interest rates rise, consumers have a greater incentive to shop around and look for better rates. Credit Karma's long-term growth expectations are still at 20-25%.

Sasan Goodarzi discussed the importance of marketing their full-service product and how they have learned a lot this year about how to make it more accessible to customers. He mentioned that they plan to use local marketing to make customers aware of the experts they have within 10 miles of their households, and that they are excited about how to evolve their marketing in the future.

Sasan Goodarzi explains that the acquisition of Mailchimp was made to create a growth platform for small businesses to help them manage their cash flow and workforce. The key to this is data, AI, and GenAI investments. Mailchimp also had its largest release in June with 150 new and updated features. The focus is on adoption, monetization, and internationalization with localization of the product in five languages and more to come.

Sasan Goodarzi and Sandeep Aujla discussed international growth, which has decelerated since the beginning of the year. They outlined their refreshed strategy of leading with both Mailchimp and QuickBooks in markets with product market fit, and with Mailchimp in other areas. The growth has decelerated due to rightsizing the pricing of Mailchimp in some geographies, which was based on competitors, GDP per capital, and other factors.

Sasan Goodarzi discussed the leadership changes in the company, including Mariana, who is the new leader of the SMB group. He also discussed the factors that give them confidence in their guidance for SMB growth, such as payment functionalities and GenAI functionality. Sandeep then discussed the prudence of the guide for SMB growth.

Intuit has a strong focus on leadership development and succession planning, as evidenced by their Intuit operating system, which is focused on talent and succession planning. They are also focused on mobility of senior roles, with the goal of having 3D in all key roles at multiple levels. Mobility can be up and to the right within the company, or outside of the company if it is the best fit for the individual. As an example, Intuit CEO Brad Smith was in TurboTax and QuickBooks before taking on the CEO role. The paragraph then mentions three leaders, Mariana, to demonstrate the company's confidence in their leaders.

Sasan and Mark have a long history with the company, having both started in TurboTax a decade ago. Mark was then promoted to Chief Customer Success Officer and is now returning to TurboTax. Alex Balazs was also moved from TurboTax to Chief Architect and Data role, and now to the CTO role. The Small Business Group grew 24% in fiscal '23, with 20% of that being organic growth. The company has a strong leadership team in place and Sandeep Aujla will answer questions about the guidance.

Intuit is confident in its guidance for the Small Business and Self-Employed Group due to the 80% subscription-based revenue and the importance of its products to SMBs. Additionally, Intuit is focusing on pursuing prime customers with Credit Karma, in addition to subprime and near-prime customers.

Credit Karma has been working to understand the needs of prime customers and launched multiple products geared towards them. They are also working on redesigning the app to enable customers to find the benefits they are looking for and launching a GenAI experience on September 6th. These initiatives are not included in their guidance, but they are excited about the potential to serve prime customers.

Intuit has been investing in data and AI for a decade, and their acquisitions of Credit Karma and Mailchimp have enabled them to use this data to benefit customers. GenAI has also been an important part of their strategy, allowing them to use machine learning and natural language processing.

Intuit has invested years of effort into creating their Generative Operating System, GenOS, which uses Intuit's financial language models trained on customer data to personalize, humanize, and do the work for customers. Intuit's goal is to put customers in control of their finances, business, and taxes, where much of the work is done for them. Intuit has been focusing on this for over a decade and will be showcasing their progress at Innovation Day and Investor Day.

Scott Schneeberger asked two questions about consumer volume and price mix and about the extension season in the post-tax season, particularly in California. Sasan Goodarzi responded that there is an opportunity for both volume and ARPC when it comes to TurboTax, and that the extension season has been confusing for customers with many states extending their filing deadlines. Sandeep also had the opportunity to jump in on the conversation.

Sandeep Aujla and Sasan Goodarzi of Intuit Inc. held a conference call to answer questions about the company's first quarter performance. Aujla noted that the company's performance was not material and that they had seen a lot of extensions from taxpayers last year. Goodarzi thanked everyone for their questions and invited them to the company's Investor Day on September 6. The call was concluded with Aujla and Kim Watkins bidding everyone goodbye.

This summary was generated with AI and may contain some inaccuracies.