Intuit's second quarter fiscal year 2024 conference call was opened by operator Angela, followed by Vice President of Investor Relations, Kim Watkins. CEO Sasan Goodarzi and CFO Sandeep Aujla also spoke, with reminders about forward-looking statements and non-GAAP numbers. The company had a strong quarter and is continuing to innovate on their platform.

In the second quarter, the company saw an 11% increase in revenue and is on track to achieve its fiscal year 2024 goals. They are confident in their strategy to dominate the $35 billion tax preparation market by leveraging data, AI, and their Virtual Expert Platform. They plan to disrupt the assisted tax category by offering virtual and in-person services, with a focus on accuracy and maximizing refunds. Their TurboTax Live Full Service has seen strong growth and positive customer feedback. Additionally, small businesses can file their taxes with TurboTax and QuickBooks Online customers can access expert help.

Intuit is offering a variety of services to help customers maximize their tax refunds, including access to experts, seamless integration with Credit Karma, and the use of their AI-powered financial assistant, Intuit Assist. These efforts are expected to increase engagement and monetization for Credit Karma and demonstrate the success of their Big Bets for future growth.

Intuit is using data and AI to improve the speed and efficiency of their services for customers, particularly in the areas of tax and financial decisions. Their platform is powered by relevant data and their GenAI Operating System, allowing for breakthrough experiences. Intuit Assist is a key part of their strategy, providing customers with a "done for you" experience and access to human expertise. This is currently being tested by select customers.

Intuit Assist is expected to increase customer engagement and monetization on the platform, driving growth and adoption of services. It is currently live in TurboTax, providing increased confidence to customers. It is also being integrated into Mailchimp and QuickBooks, offering AI-powered automations and personalized recommendations to help small businesses grow revenue and optimize cash flow. New customers can quickly get started by sharing their information, while existing customers will have their data translated into insights and recommendations. There will also be an option to connect with an expert for personalized financial advice.

Intuit Assist for Credit Karma is in beta and aims to use GenAI to provide personalized assistance to members when shopping for financial products. This can increase member engagement and conversion, leading to higher revenue per user. The company's fourth big bet is to become the center of small business growth by helping customers with various aspects of their business. In Mailchimp, they are focusing on better serving mid-market customers and pairing larger customers with account managers to increase engagement and retention. This strategy is already showing positive results.

Intuit Assist, available in higher-end Mailchimp plans, offers AI-powered automations for marketing campaigns to drive revenue growth. These personalized automations are 50% more likely to be used by customers and have reduced work by generating and editing content. Intuit is also helping small businesses get paid faster with their end-to-end money platform and innovations like easy discovery and payment-enabled invoices. Online payment volume grew by 20% in the quarter and a new payment-enabled invoicing experience is being rolled out. Intuit is also working on digitizing B2B payments and has seen a doubling in connections in their QuickBooks business network since August.

The company has implemented faster payment timelines for small businesses and is focused on innovation with AI technology. They have been recognized by Bloomberg and ranked high on the Just 100 list. In the second quarter, they achieved strong results and are on track to meet their full year guidance. Revenue and operating income have increased, driven by growth in the small business and self-employed segment. The company's platform and offerings are essential for customers looking to grow their business and improve cash flow.

The company's focus within the small business and self-employed group is on growing the core, connecting the ecosystem, and expanding globally. This includes increasing revenue from QuickBooks Online Accounting, online services such as payroll and payments, and Mailchimp. The company also aims to expand internationally by prioritizing QuickBooks Online and Mailchimp in established markets and Mailchimp in other markets. In the second quarter, revenue for the international online ecosystem grew by 16%.

In the second quarter, revenue for the Desktop Ecosystem grew by 10%, with QuickBooks Desktop Enterprise revenue growing by mid-teens. The company is nearing the end of a three-year transition for customers to switch to a recurring subscription model. In fiscal 2025, the company expects the Desktop Enterprise offering to continue growing in the high single-digit range. The company also plans to encourage remaining desktop customers to migrate to either QuickBooks Online or the desktop enterprise offering. The online ecosystem is expected to drive growth in the long term. In the Consumer and ProTax Groups, revenue for the full year remains unchanged, despite a 5% decline in the Consumer Group due to a later IRS opening. The company is confident in its plan to win this season and expects 7-8% revenue growth for the Consumer Group in fiscal 2024. In the ProTax Group, revenue grew by 8% in Q2, driven by the timing of tax form delivery. Credit Karma delivered flat revenue of $375 million, with growth in some areas offset by declines in others due to conservative lending practices. Q3 is expected to see an increase in Credit Karma Money revenue during tax season.

The speaker is pleased with the company's momentum this fiscal year and discusses their financial principles, balance sheet, and capital allocation. They have reaffirmed their fiscal 2024 guidance, including revenue and earnings growth. The company is taking a prudent approach due to economic uncertainty. They are confident in their AI-driven expert platform strategy and believe it will lead to higher engagement and monetization. The company's assets and strategy create a growth flywheel to penetrate their $300 billion TAM. The speaker then opens up the floor for questions.

The operator thanks the analysts for their questions and the first one is from Siti Panigrahi. Siti asks about the health of the small business sector and the performance of online accounting and services. Sasan Goodarzi, the CEO, responds that they are pleased with the growth and momentum despite the current macro environment. They are seeing larger customers shifting to digitization and wanting to use more of their services. He expects this trend to continue for the rest of the year and there are various factors at play in the performance of online accounting and services.

Sasan and Sandeep highlight the 21% overall online growth and strong services, as well as their focus on new customer acquisition and driving adoption of their platform. They also mention that their growth formula will start leaning more towards ARPC and that the economy is on stable footing for small businesses.

Sasan Goodarzi, CEO of Intuit, responds to a question about the financial health of small businesses during the pandemic. He shares that cash reserves are down 11% year-over-year but up 115% from pre-pandemic levels. The number of hours worked is also higher this year compared to last year, indicating the strength of small businesses. However, the health of small businesses varies by country and sector, with sectors like real estate and IT struggling while professional services and auto repairs are doing well. Larger businesses are generally healthier than smaller ones. Goodarzi predicts that 2024 will be similar for small businesses and there is no expected economic tailwind for the rest of the year.

The speaker, Sasan Goodarzi, is confident in the full year consumer guide despite a slower start to the tax season. He attributes this to consumer behavior and highlights two strategic areas that are showing promise: full service and Credit Karma. The company has leaned into their full service experience and is seeing positive results in both consumer and business tax. Additionally, the recent acquisition of Credit Karma, which has 45 million monthly active users, is expected to bring in more customers and revenue.

Sasan Goodarzi, CEO of Intuit, discusses the company's successful investments in its TurboTax app and full-service offerings, which have led to an increase in monthly active users and positioned them for a larger share of spend. He also mentions the company's focus on its share of total IRS returns and the importance of full-service for future growth. In response to a question about the mix of online services, Goodarzi explains that the company is seeing strong growth across payroll, payments, and Mailchimp businesses. He also mentions the possibility of a float component in the payroll business that may be helping to reinforce margins.

The speaker discusses the company's focus on higher value customers and improving their services to digitize their businesses. They mention the growth in online payments and payroll adoption, as well as investments in foundational elements and intuitive features. The other speaker adds that float is a small component of their payroll business and the team's work on acquiring larger customers and improving their higher end SKUs and mid market account management is helping to preserve the company's earnings power despite a one week delay in the IRS opening.

The speaker discusses the various activities that have given Intuit confidence in their portfolio of assets. They also address a question about the durability of the recent 24% year-over-year growth in online services, stating that they do not expect the macro environment to remain stable and are not relying on it for growth. They mention that credit scores and consumer spending indicate a strained consumer market.

The speaker discusses two main points about the company's strategy. First, they are not trying to outguess the economy, but rather focusing on their customers and innovation. This has led to a 21% online growth and gives them confidence in their guidance. Second, the company's pricing strategy is based on the value and innovation of their offerings, not related to the macro environment. The speaker also mentions the growing importance of GenAI, which is expected to benefit the company in the upcoming tax season through increased conversions from free to paid services.

Sasan Goodarzi, CEO of Intuit, discusses the opportunities and potential for growth on their Credit Karma and SMB platforms. He emphasizes that their work on Intuit Assist, an AI-powered service, will create a new category of experiences and contribute to their $300 billion TAM. However, he clarifies that this will not impact their results in the near future. Goodarzi mentions that Intuit Assist will have a profound impact on their full service offerings, which is made possible by their investments in data, AI, and ecosystem of apps. This service is also supported by their network of experts and machine learning capabilities.

The biggest opportunity for the company is to make the process of filing taxes easier and faster for customers. They aim to do this by offering full service, which includes getting taxes done in less than an hour, maximizing refunds, and providing excellent service. The platform that supports full service will also help with conversion and increase customer confidence. Additionally, the company is leveraging AI to personalize credit card and loan recommendations for customers based on their data. With the new GenAI technology, customers can now interact with Credit Karma and receive personalized recommendations based on their specific needs.

During a recent conference call, Intuit CEO Sasan Goodarzi discussed the company's focus on revenue and profitability increase for small businesses. They are testing new services, such as providing experts to offer insights and advice on managing cash flow and increasing revenue. These efforts are expected to create a new category of services and drive growth. Goodarzi also mentioned the company's use of data and AI to inform their decisions and improve their offerings. In terms of cross-selling, Goodarzi did not provide specific updates but mentioned their partnership with Mailchimp and the upcoming launch of Intuit Assist, which will provide support for both front office and back office needs.

Intuit's investments are focused on making data usable and structured for their machine learning and AI capabilities to provide insights for customers. Their first priority is to ensure that Intuit Assist can help with marketing campaigns for small businesses. They are also working on integrating their products, such as QuickBooks and Mailchimp, to provide a seamless experience for customers. This will allow for cross-product AI capabilities and better integration at key moments for customers.

Sasan Goodarzi, CEO of Intuit, explains that the company is testing product integration with platforms like QuickBooks and Mailchimp to provide customers with marketing capabilities. They have found that this approach is more effective than trying to sell Mailchimp separately. Goodarzi also mentions that Credit Karma's growth will depend on stability with partners and the success of their app redesign and new features like Intuit Assist.

The speaker discusses three areas of focus for the company, including improved customer interaction, prime initiatives, and product integration for TurboTax. They also mention the success of network connections and the rollout of same day ACH, with potential for other bill pay options such as virtual credit cards.

The company is focused on digitizing their processes to help customers get paid faster and pay bills. They are also working on faster payment options and increasing their network connections. The company is managing their costs and investments carefully in order to scale growth and increase profitability.

Intuit has a history of increasing margins while bringing innovation to markets, such as Intuit Assist and localization of products in Mailchimp. They are confident in their ability to meet margin commitments for the full year based on their performance in the first few quarters. In the QuickBooks business, there is more growth and traction in the mid-market segment (10-100 employees) compared to the smaller segment (1-9 employees). Intuit is focusing their innovation and go-to-market efforts in the higher value customer segment.

The company remains focused on disrupting from the low end while also doubling down on serving higher value customers. They see more resiliency and momentum with larger customers and find the unit economics of the upmarket attractive. They are deliberately leaning into this market and see ARPC as a growth lever. This may shift their focus away from customer growth in the SMB segment.

The speaker is excited about the opportunity to target larger customers, as they have a higher lifetime value and ARPC, leading to better retention and improved economics. However, there are also higher customer acquisition costs and fewer of these customers in the overall market. The company will continue to focus on 10-20% customer and ARPC growth, but may lean more towards ARPC growth due to the mid-market focus. In response to a question, the speaker also provides an update on the industry's performance and discusses improvements in their full service offerings.

The company's view on the number of filers for the tax season has not changed, and they are focused on winning as many filers as possible. Last year, there were some growing pains with the full service option, including too much friction for customers and learning from campaign strategies. This year, they have removed friction and are engaging customers with experts early on. They are also investing in infrastructure for future seasons.

Sandeep discusses the powerful capabilities of their product recommendation score and the potential for virality in their services. He also mentions their efforts to improve their online presence and attract more customers. Keith asks about the potential for margin benefits from their generative AI technology, and Sandeep talks about the potential for improved internal usage and the current ramp-up of these technologies.

GenAI costs have already been factored into the company's guidance, and they have an advantage in terms of cost structure due to the data they have and their reliance on third-party data centers. There are also opportunities for the company to improve economics through the use of AI, such as in customer success and staffing.

The speaker discusses the potential benefits of using GenAI and expresses confidence in the company's ability to take advantage of these opportunities. The interviewer confirms that this will have a positive impact on margins. The speaker thanks everyone and concludes the call.

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