INTUIT INC. — Call Transcript 2025

All right. The guy in the back gave us a thumbs up. Excellent. Thank you, everyone, for joining us. My name is Keith Weiss. I run the U.S. Software Equity Research franchise at Morgan Stanley. And I'm very pleased to have with us this morning from Intuit, CFO Sandeep Aujla. Sandeep, thank you so much for joining us. Hey, Keith. Good morning. Thank you for having me. Excellent. Exciting time at Intuit right now. At OpenAI as well, but more exciting at Intuit. Pre-staging my first question here. There's a lot going on at Intuit, some really interesting initiatives in the mid-market. I think it was a very important tax season last year and a couple of breakthroughs, and I definitely want to dig into all of those details, but I thought we could start with the newest news item, which was the OpenAI partnership, and I think this is a really interesting one to dig into because there's still a lot of debate among investors trying to understand the nature of that relationship, but also a lot of fear among investors in terms of potentially letting the fox into the hen house, if you will, that there's been concern about OpenAI potential or just LLMs in general emerging as a competitive dynamic for tax. So can you talk to us maybe a little bit about the relationship, the nature of the relationship, and how you guys get comfortable with that potential risk, if there is one at all? Yeah. Let me start out by just sharing the premise for the relationship. For us, we want to make sure that our products are showing up where the eyeballs are. We have nearly 100 million customers. OpenAI has 800 million weekly active. So even a reasonable level of conversion, that could be a meaningful impact on our net customer growth. So that's exciting for us. And for OpenAI, what they want to do is they've identified select industries where they want to make sure that the answers are not just generalized based on public information, but very specific, tangible, that the customer could actually take action on. And we happen to be one of those industries. And so what you'll see as we launch these experiences in the coming days and weeks is when a customer has a question around taxes, has a question on their financial situation, or has a question around their business, how to grow their business, how to manage their accounting, more likely than not, Intuit will come up. And they'll have an opportunity to come to our app on OpenAI, engage with our app, and get answers that are very tangible and very actionable. So that's the premise and why we're excited about it. In terms of the question you had around the potential worries, the data privacy, the data governance, that does not change. It's our data. The customer's interaction is going to be on our platform. The unit economics to us remain unchanged. So I think it's absolutely a win-win situation for both us as well as OpenAI, and most importantly, for the customer who will get very tangible and actionable perspectives from us. Got it. So it kind of sounds like from an Intuit perspective, this is a new marketing channel. This is a place where you could expose not necessarily an advertisement, but a little bit of your product, a little bit of the data, a little bit of your know-how about tax, consumer finance to the end customer. And then it's basically a link through to the broad application. If you really want to get down to business, if you will, if you want to do your taxes, if you want to get that credit card, you're going to be going to an Intuit property to transact that. That's exactly right, and I encourage the capital allocators interested in this to go to our website, and in the press release, we have embedded a short video on what these experiences look like, and then, of course, in the coming days and weeks, we'll have the real-life stuff out there that people could play with and actually get a feel for how this will interact, and it'll be very much in line with what you're stating, and we want to make sure that the customer knows that their relationship, their engagement is with Intuit, and that's a very important part of the relationship we want to preserve, and you'll see that come across in the experience. Got it. So we're heading into tax season. Always an exciting time at Intuit. Maybe just high-level thoughts, how are you guys feeling going into this tax season? And is anything changing versus what was the game plan? I'm sure you're not going to give us the whole game plan, but what the game plan was generally going into last tax season? Yeah. Our tax Super Bowl starts in a few weeks here. You know what's really exciting for us, Keith, going into this tax season is it's a continuation of the momentum we built last year, the things that we executed last year, and just doing them this year and doing them that much better. There were three key levers that drove the experience and the outstanding outcomes we had last year: double-digit overall growth in tax, 47% growth in assisted tax. The first and foremost was marketing. We are continuing to invest in expanding our brand equity from do-it-yourself taxes to this is where you come to get your taxes done for you. And we are starting to market early because 30% of people who do their tax-assisted way make the decision in the fall, well before January, when we traditionally market. We learned from last year. We honed our marketing this year. And now we're also making it that much warmer, that the leads we got in the fall, we're keeping them warm all the way till February, March, when they'll start doing their filing. So that's one. Secondly, showing up local. Local matters tremendously when it comes to assisted taxes. People are looking for tax preparer near me. And we had 400 locations last year. But the big thing was we didn't start showing up organically in Google Search, Yelp Search until March, because we needed reviews. We needed to verify the locations. So I didn't have the full season of benefit last year. This year we get the full season of benefit. And instead of 400 locations, we have 600 locations. And we know local matters tremendously, 5x better conversion, and just the confidence that people have. And thirdly is the better-together experience with Credit Karma. You have 40 million monthly active users on Credit Karma. Most of them are not using us to do their taxes. So that's a massive opportunity for us to get them from Credit Karma into TurboTax and have their taxes done in a very bespoke, beneficial way to where they feel that they are part of that one ecosystem, whether it's getting their taxes done in a matter of minutes, but most importantly, getting access to their money quickly through Credit Karma Money. Got it. I want to double-click on the assisted side of the equation. That was really, from my perspective, the eye-popping number in the tax results last year, how well you guys accelerated that live program, and assisted was a big part of that, and what's so important about that is the expansion of the market opportunity, so correct me if I'm wrong, but I think we've talked about DIY is about a $5 billion annual opportunity, getting into assisted takes you to $35 billion. That's right. Right, so a big expansion. The localization, there's always something that piques my interest, but also gets me a little bit worried with Intuit. When you guys went into assisted as a software analyst, we're like, wait a second. People are getting involved in the equation. Is that going to be more expensive? Is that going to be higher gross margins? But with the live offering over the past couple of years, you guys have proven out an ability to do live at very good gross margins. Now the more recent one is localization. The storefronts popping up that Intuit is part of the Intuit network. Should we be worried about that dragging on gross margins or dragging on OpEx and making it less profitable for Intuit overall? Yeah. I'll start at the top. You should not, and the investors should not be worried about our ability to continue to grow our revenues faster than expenses, which is our top two financial principles, thereby leading to margin expansion. Now let me get into your question around real estate and localization. Local matters a lot when it comes to unlocking the $35 billion assisted tax category. And what matters in local is that folks just want to have the confidence that there's a tax preparer near them if they want to show up in person. As an example, I wanted to make sure that my Morgan Stanley advisor was near me, even though I've rarely interacted in person, and I just do it over Zoom. And our full-service customers even tell us to that effect that 39% of them just want a zero-touch experience. But they just want the confidence of having someone local, and we see that manifest in 5x better conversion, so with that, local is important, but we wanted to do it in a very asset-light way, so the 600 locations we have, they are short-term, a year, a couple-year type of leases. They're asset-light. They're not a big expense. They're all part of the guidance, and as I look at the ROI on the spend and how it manifests itself in better conversion and the growth in assisted, it's a very solid ROI as well, so it's an area that I think is very much on strategy, and it being asset-light makes sure that we continue to have the software-like margins that we've been enjoying. Got it. Got it. And you talked about the expansion from 400 locations to 600 locations. The rationale being if there's an advisor within 50 mi of the potential tax customer, there's a 5x conversion, right? Is there some formula that we should be doing in terms of understanding the extent of is it going to go to 600 locations to 800 or 600 to 6,000 based upon that 50 mi radius? Yeah. I think the way to look at it is if you look at the U.S. population, this is a larger U.S. discussion around assisted tax at this time. There are select markets where the concentration of population is. So the 600 may go up a little bit, but it's not going to go up multiples. Right? So right now, as I've talked to our go-to-market teams, the 600 feels like a pretty solid number. It'll be till the 600, and I wouldn't worry too much about us meaningfully expanding that in the near-to-intermediate term. Got it. Got it. So when we're talking about the opportunity on assisted, maybe you can help us compare and contrast sort of the journey that an assisted customer takes versus the journey that a DIY customer takes. So we've been trained by Intuit to think about top-of-funnel, about free-to-paid conversion. With assisted, what's the dynamics in terms of getting an assisted customer to switch from his current relationship? Because they have some relationship that sort of makes them assisted to use an alternative product like Intuit. Yeah. So there are around 11 million customers that switch every year. And the primary catalyst for them to switch is typically that they had a less-than-ideal experience with their preparer this year. Or the secondary is that their complexity increased. For example, they bought a house. So for me, my kids started going to college. And how does that play into my taxes? And I want to talk to a tax advisor. And the way the experience works is they typically look for a preparer. It usually starts with either a search like tax preparer near me, or they look for word-of-mouth type recommendations. And that's where we want to make sure we're showing up both in terms of local as well as early marketing because most of them are going to have that less-than-ideal experience around the fall when they're doing their tax filing. And they'll show up. They'll reach out, and we'll get them in touch with an expert that will share with them what the experience is, what the pricing could look like, and how we do the assisted tax filing, and then lead them into opening up an Intuit account and continuing that journey with us. That's the typical approach for the assisted area. On the do-it-yourself, folks will typically start out, go online, try to find what's the best tax preparation software, depending on their level of complexity. Some are free. Some want to get a premium offering, such as our TurboTax Deluxe. Some will want to talk to an expert to have a question or two, so that's a more broader spectrum of the level of engagement, whereas assisted very much starts out by them looking for a preparer and wanting to engage with a human being. Got it. Traditional service-oriented model. Got it. Let's talk briefly about sustaining the top-of-funnel when it comes to the DIY side of the equation. We've talked for a long time about sort of free being a good top-of-funnel mechanism. Last year, you guys saw an additional decline. I think it was about a 2 million unit decline in the paying-nothing customers. Is that something we should be concerned about in terms of maybe the top-of-funnel is getting skinnier? Or are you guys just being more selective in terms of who you're targeting based upon what you know about who's more likely to convert? Our strategy when it comes to taxes is quite simple. Disrupt the assisted tax category. Maintain our dollar share in DIY. And that's what you'll see us execute. This past year, we were deliberate about investing in our marketing campaign to expand the brand equity, as I shared earlier, from DIY to this is how you do taxes, meaning we could do the taxes for you. And as part of that strategy, we saw some less units on DIY. We also saw some DIY customers switch to assisted tax as their complexity evolved a bit. But looking ahead, I feel confident in our ability to both disrupt and grow the assisted tax category as well as maintain our dollar share in DIY across delivering value, delivering superior experiences, helping customers get their taxes done 12% faster as we did this past year, half the customers getting their tax done in less than an hour. All these things matter tremendously to the simple filer who's doing DIY or free, and also keep in mind, Credit Karma is a big funnel here for us. Those 40+ million monthly active users, many of them not doing their taxes with us, are in the category such as a sub-$100K income band. That is a part of the area that we need to make sure that we are having success with to maintain our dollar share in DIY. Got it, and I guess the other side of the equation is also retention. Improving retention is a great way to keep up units. Can you talk to us about how trends in retention have been going over the past couple of years and what you guys can do to improve that retention over time? Yeah. The way we think about retention is retention on our platform. So less about DIY versus assisted. As I shared earlier, I may be assisted this year just because of increased complexity. And next year, my complexity is status quo. And I go back to DIY. Our retention is quite high. It's near 80%, almost like a SaaS-type model. In fact, one of the most amazing things for me is when I was onboarding and learning more about the tax business is that folks think of this as an episodic annual engagement. It very much behaves like a SaaS model because people have an amazing experience. And most of them come back the next year. And that shows up in the strong retention we have. Got it. Got it. You mentioned Credit Karma. We can use that as a little bit of a pivot to the broader business. How much juice is there left to squeeze in that? You guys have had Credit Karma on board for a couple of years now. You've had programs to sort of bring the two together and use Credit Karma as that lead generation tool for tax. Is there anything new, any new dynamics in that that's going to enable that relationship to keep yielding, if you will, for TurboTax? Yeah. You know, Credit Karma is giving us a lot of juice, and there's plenty more to get for years to come. The business grew 27%, as you know, this past quarter. It's been growing north of 18% CAGR since we acquired it. And we continue to have success in delivering innovations to our partners. We continue to take more share of their spend. And in our customers, just getting a superior experience on our platform. As I look forward, we have a massive opportunity to continue to unlock the prime segment. We are getting more prime-oriented inventory, for example, cards that would be applicable to them. We are bringing in innovations such as my cards, where many of us who are prime customers want to be able to track our credit card rewards and see how to maximize those benefits. We're building that on there. And we are also going to be looking at expanding into new growth verticals, such as HELOCs, home equity loans, or mortgages to complement the verticals we have across credit cards, personal loans, and insurance. So much to go across Credit Karma. But the bigger opportunity for opening up the aperture is across the consumer ecosystem. Last year, Credit Karma gave a contributing point of growth to TurboTax. I think there's much more to come there. And that's going to come from us getting those 40+ million monthly active users to file with TurboTax, getting their refund put into Credit Karma Money, driving the year-round engagement. And that's going to be the powerful unlock that you'll see start to manifest this year and continue to gain momentum in the years ahead. Got it. Got it. A lot to talk to in both Credit Karma and TurboTax. But I want to make sure that we focus some on the global business solution segment. Also, a lot going on there. So to me, the big story, right, in Intuit is this move-up market. We've been moving up market for a while now. We've gone QBO, QBO Advanced. But now we have Intuit Enterprise Suite, right? Can you talk to us about what the Intuit Enterprise Suite enables, where it lets you go in terms of customer size, market opportunity versus what you're able to achieve, where you're able to go with the QuickBooks Online Advanced? Sure. You know, traditionally, the QuickBooks business served the small businesses. They would grow with us. And you have businesses from new start-ups up to $2.5 million, $5-ish million-dollar opportunity set. And we see an opportunity to go into the mid-market that we define as customers making $2.5 million-$100 million in revenue. And that's not a very steadfast bar. We can serve customers well over $100 million. But that revenue represents the complexity of those customers. Advanced works exceptionally well for those up to $10 million. Once you get above $10 million, your complexity sets in. You have multiple jurisdictions. You have multiple entities. You're doing cross-border transactions. You're doing multiple currencies. And that's where IES is really resonating for those customers who make over $10 million in revenue. We are focused on four primary verticals right now: construction and field services, nonprofits, professional services, and manufacturing and wholesale, and having good success there. Our quarterly product releases are resonating well. The July product release resonated strongly. We shared that contracts were up 50% from Q4 to Q1 as a result of that. We pushed out the November release, and that's continued to drive product-market fit, so solid momentum in that business. What also excites me is the improvements we're making in the go-to-market side. Our sales force, around 250, their productivity continues to go up, and that's giving us the confidence that we'll be scaling that sales force as we exit the year, and secondly, the partnerships that we're doing with the large accounting firms, particularly the tech-forward firms. They are eager to get new logos onto our platform, onto IES, because they're seeing the benefit of cost of ownership, the onboarding, the ease of use. There's a lot of momentum getting built in IES. That's driving our confidence in what that's going to impact, that's going to have on the P&L in the years ahead. Got it. Got it. In that go-to-market strategy, I think you could course-correct me a little bit because I've been focusing a lot on the opportunity within the base, right, to basically better retain graduates. Like the companies that exceeded that 10 million, they would go to a competitor because they didn't have the ability to consolidate or some higher-level functionality. How should we think about the opportunity and the go-to-market focus of retaining the base versus, like you were talking about, actually going out and getting net new customers to the platform? Yeah. I think they're both massive opportunities for us in terms of driving the top-line growth. So when you look at customers or businesses in $2.5 million-$100 million range, there are about 1.7 million of them out there. 800,000 of them are already in our base, using non-mid-market-oriented products within QuickBooks. So that's an opportunity for us to upgrade them to the products that are more suitable for their needs, whether it's QuickBooks Advanced or IES. And that's been a larger focus, about 80%-90%, depending on the month, of our deals that are coming from those customers upgrading. And we're seeing them pay 2x more when they upgrade because they're getting an auto-managed better product. And the beauty of this is that our sales force is having conversations with them. We're getting them to not just upgrade the ERP, but also discover parts of the platform, such as payments, payroll, that they could be attaching, which meaningfully drives up the ARPC that we're getting. That's been the focus. We're also having our sales force sharpen their teeth by going out and hunting for new accounts. We're having success. We're winning some from competitors. There are also plenty of greenfield opportunity people who haven't adopted financial management software, who are coming in and using IES. In fact, most of the growth of the new logos is people who don't have financial management software. That's, I think, going to be unlocked. Like any growth journey, keep in mind, we've only been in the market for about 14 months with IES. You have to hone in your selling motions on the existing base and the upgrade cycle, and then go external for the new logos. That's going to be the journey we take here. And the accounting partnerships are going to be a massive tailwind in driving the new logos because they're having those conversations with the potential new customers. They have a huge influence on the mid-market customer and what services platforms adopt. So I think that's going to be what will start showing up in the quarters ahead. Got it. And a couple of months back at Intuit Connect, you guys released the Intuit Accountant Suite. To what degree do these two kind of come together, giving the accounts a more robust kind of solution of their own to be able to better help you service a more complicated customer? Yeah. You know, if you step back and reflect on an accounting firm, they are kind of a mid-market business themselves. They're a professional services organization. They are looking to consolidate their tech stack. They're looking to massively continue to improve the efficiency and the productivity of their workforce. And that's what we enable with IES. We can consolidate this and give them better visibility into their practice, where there's opportunities to unlock productivity, drive better partnership with how much their workforce does and how much they can outsource to us through our live experts. And this will be an opportunity for us to continue to deepen our partnership with accounting firms, but also give them an incentive to drive more business to us, particularly on the mid-market side. Got it. You talked about online services, the potential for higher attach. If you wanted to give me a Christmas gift, attach rates would be a great Christmas gift in terms of Intuit. I'll add to that list. Excellent. Any color you could give us, one, just on sort of the attach rates and sort of the uplift that you see with the mid-market customers? Because it just naturally feels like they're larger customers. They have higher payment volumes. They have higher employee counts, right? There's a bigger opportunity for online services. So maybe talk about a lot of the services that have been around for a while, payments and payroll, but then also the opportunity from the agentic side of the equation because you guys have been rolling out a lot more functionality. How are we seeing that come into the P&L? Yeah. So you know, services excites me a lot because I view the services business as a call option on the success of our customers. As they scale and their payment volumes grow, they hire more employees. Our unit economics also continue to improve. And what we see, particularly with the mid-market customers, they tend to attach services a lot more. We see about nine points higher payroll attach. We see about seven points higher payments attach. And the other thing is that what our history has shown us is that when we put a human in touch with our customers, such as when a live expert is talking to the customers, our QuickBooks Live customers have around a 22-point higher attach rate of platform services than those who don't use QuickBooks Live. When you now think about the mid-market customers, they are talking to a salesperson who could truly unpack to them the power of the platform and how that could help this customer run their business more efficiently and improve their net working capital position and just utilize the platform to their benefit. That's the excitement that we have around mid-market and the services attach going forward. Got it. Got it. The next extension of kind of that online services is going from what has traditionally been very much a back-office-focused platform, at least kind of in our nomenclature in financials, payroll, payments, to more CRM-focused with Mailchimp. Mailchimp has been, I would say, the more difficult child versus Credit Karma, which has worked splendidly well. Mailchimp has had some growing pains. But you guys are very confident in the potential for acceleration in Mailchimp into the back half of this year. Can you talk to us about some of the fixes that have been put in for Mailchimp to improve that product-market fit, maybe some of the early signs that you guys are seeing that gives you that confidence in an acceleration into or exiting this year? Yeah. You know, as I look at the Mailchimp business, there are strategic actions we've taken that give us the confidence in the potential ahead. We continue to see success with the mid-market customers. As we improve the functionality on that product, the mid-market customer's adoption has gone up. We've added more salespeople. That salespeople productivity is ramping up ahead of our own internal expectations. So that's an area of encouragement. Secondly, as we have rolled out new functions, features such as SMS, and just improved the onboarding flow, particularly for the small customers, where a lot of this problem developed as we built the functionality for the mid-market customers, we just made the onboarding flow and the discoverability of features to get the speed to benefit harder for the small customers. I kind of compare it to, in your world, it's like someone wanted to go to Yahoo Finance to look up a stock quote. I put a Bloomberg Terminal in front of them, right, and we have now simplified that onboarding flow, and that's getting better product recommendation scores. Now we are dialing up the marketing spend, and the thesis is that as we dial up the marketing spend, the funnel continues to perform, and that drives the growth, and we'll start to see this play out a lot more in the February-March time frame. As you can imagine, right now, with the holiday season coming up, folks aren't looking at platform switching, but once we get past the holiday season into February-March, that's when we'll really start getting a solid read in how our thesis is playing out. Got it. Got it. I think we have time for one last question. I want to kind of wrap this all up on the margin side of the equation. A lot of really interesting opportunity for Intuit on the top-line growth side of the equation. You're unlocking big new market opportunities and assisted big new market opportunities in the mid-market on the GBS side of the equation. You are adding salespeople to go after these. You're adding locations. Yet you remain confident in margin expansion and revenues outpacing the level of expense growth, despite having some really good product initiatives to invest behind. So how are you thinking about that balance? And what helps drive the additional leverage in the company? So first and foremost, we want to make sure that we are putting fuel on these growth vectors. And one thing that I do as I look at where expenses are going, that ever-increasing portion of that is going towards the three big bets: delivering Intuit experiences, delivering end-to-end money movement solution, and unlocking the opportunity in mid-market. And we are seeing over 40% of our spend go towards those big bets and expect that to scale up to 60% in the near term and to 80% over the intermediate term. And in terms of where the confidence for margin expansion comes from, you know, it starts with traditional focus on expense management, making sure dollars are going towards the things that are going to be needle movers for the business and being really disciplined about cutting areas that aren't paying off to the level that they should be. It comes with operating at increased scale and just having economics that come with that scale, so for example, when my payment volume goes up 29%, I'm not increasing my risk team by 29% or my payments team, so a lot of that flows straight to my bottom line, and then using technology, whether it's AI, robotic product automation, or other technology to improve the productivity of our workforce. With AI, we're delivering about $135 million in savings in customer success organization just this fiscal year. We're unleashing the productivity of our developers north of 30%. We're using AI across our marketing function, our sales function, increasing the productivity of that sales team, so these are all areas that we're still in the early innings. I see so much more that it could play itself, including AI going from an add-on complement to the work that our teams are doing to actually replacing and taking over the full work that the teams are doing. That's giving me the confidence and the ability to continue to scale margin for years to come. Outstanding. Well, unfortunately, that takes us to the end of our time. But thank you for sharing a very exciting story. I'm very excited about Intuit. And I'm sure everyone out here is as well. Thank you, Keith. Thank you, everyone, for your time. Awesome. I appreciate it.

Speaker 3: All right. The guy in the back gave us a thumbs up. All right. all right The guy in the back gave us a thumbs up. the guy in the back gave us a thumbs up

Speaker 1: Excellent. Thank you, everyone, for joining us. My name is Keith Weiss. I run the U.S. Software Equity Research franchise at Morgan Stanley. And I'm very pleased to have with us this morning from Intuit, CFO Sandeep Aujla. Sandeep, thank you so much for joining us. Excellent. excellent Thank you, everyone, for joining us. thank you everyone for joining us My name is Keith Weiss. my name is keith weiss I run the U.S. i run the u.s Software Equity Research franchise at Morgan Stanley. software equity research franchise at morgan stanley And I'm very pleased to have with us this morning from Intuit, CFO Sandeep Aujla. and i'm very pleased to have with us this morning from intuit cfo sandeep aujla Sandeep, thank you so much for joining us. sandeep thank you so much for joining us

Speaker 2: Hey, Keith. Good morning. Thank you for having me. Hey, Keith. hey keith Good morning. good morning Thank you for having me. thank you for having me

Speaker 1: Excellent. Exciting time at Intuit right now. Excellent. excellent E xciting time at Intuit right now. e xciting time at intuit right now

Speaker 2: At OpenAI as well, but more exciting at Intuit. At OpenAI as well, but more exciting at Intuit. at openai as well but more exciting at intuit

Speaker 1: Pre-staging my first question here. There's a lot going on at Intuit, some really interesting initiatives in the mid-market. I think it was a very important tax season last year and a couple of breakthroughs, and I definitely want to dig into all of those details, but I thought we could start with the newest news item, which was the OpenAI partnership, and I think this is a really interesting one to dig into because there's still a lot of debate among investors trying to understand the nature of that relationship, but also a lot of fear among investors in terms of potentially letting the fox into the hen house, if you will, that there's been concern about OpenAI potential or just LLMs in general emerging as a competitive dynamic for tax. Pre-staging my first question here. pre-staging my first question here There's a lot going on at Intuit, some really interesting initiatives in the mid-market. there's a lot going on at intuit some really interesting initiatives in the mid-market I think it was a very important tax season last year and a couple of breakthroughs, and I definitely want to dig into all of those details, but I thought we could start with the newest news item, which was the OpenAI partnership, and I think this is a really interesting one to dig into because there's still a lot of debate among investors trying to understand the nature of that relationship, but also a lot of fear among investors in terms of potentially letting the fox into the hen house, if you will, that there's been concern about OpenAI potential or just LLMs in general emerging as a competitive dynamic for tax. i think it was a very important tax season last year and a couple of breakthroughs and i definitely want to dig into all of those details but i thought we could start with the newest news item which was the openai partnership and i think this is a really interesting one to dig into because there's still a lot of debate among investors trying to understand the nature of that relationship but also a lot of fear among investors in terms of potentially letting the fox into the hen house if you will that there's been concern about openai potential or just llms in general emerging as a competitive dynamic for tax So can you talk to us maybe a little bit about the relationship, the nature of the relationship, and how you guys get comfortable with that potential risk, if there is one at all? So can you talk to us maybe a little bit about the relationship, the nature of the relationship, and how you guys get comfortable with that potential risk, if there is one at all? so can you talk to us maybe a little bit about the relationship the nature of the relationship and how you guys get comfortable with that potential risk if there is one at all

Speaker 2: Yeah. Let me start out by just sharing the premise for the relationship. For us, we want to make sure that our products are showing up where the eyeballs are. We have nearly 100 million customers. OpenAI has 800 million weekly active. So even a reasonable level of conversion, that could be a meaningful impact on our net customer growth. So that's exciting for us. And for OpenAI, what they want to do is they've identified select industries where they want to make sure that the answers are not just generalized based on public information, but very specific, tangible, that the customer could actually take action on. And we happen to be one of those industries. Yeah. yeah Let me start out by just sharing the premise for the relationship. let me start out by just sharing the premise for the relationship For us, we want to make sure that our products are showing up where the eyeballs are. for us we want to make sure that our products are showing up where the eyeballs are We have nearly 100 million customers. we have nearly 100 million customers OpenAI has 800 million weekly active. openai has 800 million weekly active So even a reasonable level of conversion, that could be a meaningful impact on our net customer growth. so even a reasonable level of conversion that could be a meaningful impact on our net customer growth So that's exciting for us. so that's exciting for us And for OpenAI, what they want to do is they've identified select industries where they want to make sure that the answers are not just generalized based on public information, but very specific, tangible, that the customer could actually take action on. and for openai what they want to do is they've identified select industries where they want to make sure that the answers are not just generalized based on public information but very specific tangible that the customer could actually take action on And we happen to be one of those industries. and we happen to be one of those industries And so what you'll see as we launch these experiences in the coming days and weeks is when a customer has a question around taxes, has a question on their financial situation, or has a question around their business, how to grow their business, how to manage their accounting, more likely than not, Intuit will come up. And they'll have an opportunity to come to our app on OpenAI, engage with our app, and get answers that are very tangible and very actionable. So that's the premise and why we're excited about it. In terms of the question you had around the potential worries, the data privacy, the data governance, that does not change. It's our data. The customer's interaction is going to be on our platform. The unit economics to us remain unchanged. And so what you'll see as we launch these experiences in the coming days and weeks is when a customer has a question around taxes, has a question on their financial situation, or has a question around their business, how to grow their business, how to manage their accounting, more likely than not, Intuit will come up. and so what you'll see as we launch these experiences in the coming days and weeks is when a customer has a question around taxes has a question on their financial situation or has a question around their business how to grow their business how to manage their accounting more likely than not intuit will come up And they'll have an opportunity to come to our app on OpenAI, engage with our app, and get answers that are very tangible and very actionable. and they'll have an opportunity to come to our app on openai engage with our app and get answers that are very tangible and very actionable So that's the premise and why we're excited about it. so that's the premise and why we're excited about it In terms of the question you had around the potential worries, the data privacy, the data governance, that does not change. in terms of the question you had around the potential worries the data privacy the data governance that does not change It's our data. it's our data The customer's interaction is going to be on our platform. the customer's interaction is going to be on our platform The unit economics to us remain unchanged. the unit economics to us remain unchanged So I think it's absolutely a win-win situation for both us as well as OpenAI, and most importantly, for the customer who will get very tangible and actionable perspectives from us. So I think it's absolutely a win-win situation for both us as well as OpenAI, and most importantly, for the customer who will get very tangible and actionable perspectives from us. so i think it's absolutely a win-win situation for both us as well as openai and most importantly for the customer who will get very tangible and actionable perspectives from us

Speaker 1: Got it. So it kind of sounds like from an Intuit perspective, this is a new marketing channel. This is a place where you could expose not necessarily an advertisement, but a little bit of your product, a little bit of the data, a little bit of your know-how about tax, consumer finance to the end customer. And then it's basically a link through to the broad application. If you really want to get down to business, if you will, if you want to do your taxes, if you want to get that credit card, you're going to be going to an Intuit property to transact that. Got it. got it So it kind of sounds like from an Intuit perspective, this is a new marketing channel. so it kind of sounds like from an intuit perspective this is a new marketing channel This is a place where you could expose not necessarily an advertisement, but a little bit of your product, a little bit of the data, a little bit of your know-how about tax, consumer finance to the end customer. this is a place where you could expose not necessarily an advertisement but a little bit of your product a little bit of the data a little bit of your know-how about tax consumer finance to the end customer And then it's basically a link through to the broad application. and then it's basically a link through to the broad application If you really want to get down to business, if you will, if you want to do your taxes, if you want to get that credit card, you're going to be going to an Intuit property to transact that. if you really want to get down to business if you will if you want to do your taxes if you want to get that credit card you're going to be going to an intuit property to transact that

Speaker 2: That's exactly right, and I encourage the capital allocators interested in this to go to our website, and in the press release, we have embedded a short video on what these experiences look like, and then, of course, in the coming days and weeks, we'll have the real-life stuff out there that people could play with and actually get a feel for how this will interact, and it'll be very much in line with what you're stating, and we want to make sure that the customer knows that their relationship, their engagement is with Intuit, and that's a very important part of the relationship we want to preserve, and you'll see that come across in the experience. That's exactly right, and I encourage the capital allocators interested in this to go to our website, and in the press release, we have embedded a short video on what these experiences look like, and then, of course, in the coming days and weeks, we'll have the real-life stuff out there that people could play with and actually get a feel for how this will interact, and it'll be very much in line with what you're stating, and we want to make sure that the customer knows that their relationship, their engagement is with Intuit, and that's a very important part of the relationship we want to preserve, and you'll see that come across in the experience. that's exactly right and i encourage the capital allocators interested in this to go to our website and in the press release we have embedded a short video on what these experiences look like and then of course in the coming days and weeks we'll have the real-life stuff out there that people could play with and actually get a feel for how this will interact and it'll be very much in line with what you're stating and we want to make sure that the customer knows that their relationship their engagement is with intuit and that's a very important part of the relationship we want to preserve and you'll see that come across in the experience

Speaker 1: Got it. So we're heading into tax season. Always an exciting time at Intuit. Maybe just high-level thoughts, how are you guys feeling going into this tax season? And is anything changing versus what was the game plan? I'm sure you're not going to give us the whole game plan, but what the game plan was generally going into last tax season? Got it. got it So we're heading into tax season. so we're heading into tax season Always an exciting time at Intuit. always an exciting time at intuit Maybe just high-level thoughts, how are you guys feeling going into this tax season? maybe just high-level thoughts how are you guys feeling going into this tax season And is anything changing versus what was the game plan? and is anything changing versus what was the game plan I'm sure you're not going to give us the whole game plan, but what the game plan was generally going into last tax season? i'm sure you're not going to give us the whole game plan but what the game plan was generally going into last tax season

Speaker 2: Yeah. Our tax Super Bowl starts in a few weeks here. You know what's really exciting for us, Keith, going into this tax season is it's a continuation of the momentum we built last year, the things that we executed last year, and just doing them this year and doing them that much better. There were three key levers that drove the experience and the outstanding outcomes we had last year: double-digit overall growth in tax, 47% growth in assisted tax. The first and foremost was marketing. We are continuing to invest in expanding our brand equity from do-it-yourself taxes to this is where you come to get your taxes done for you. And we are starting to market early because 30% of people who do their tax-assisted way make the decision in the fall, well before January, when we traditionally market. We learned from last year. Yeah. yeah Our tax Super Bowl starts in a few weeks here. our tax super bowl starts in a few weeks here You know what's really exciting for us, Keith, going into this tax season is it's a continuation of the momentum we built last year, the things that we executed last year, and just doing them this year and doing them that much better. you know what's really exciting for us keith going into this tax season is it's a continuation of the momentum we built last year the things that we executed last year and just doing them this year and doing them that much better There were three key levers that drove the experience and the outstanding outcomes we had last year: double-digit overall growth in tax, 47% growth in assisted tax. there were three key levers that drove the experience and the outstanding outcomes we had last year double-digit overall growth in tax 47% growth in assisted tax The first and foremost was marketing. the first and foremost was marketing We are continuing to invest in expanding our brand equity from do-it-yourself taxes to this is where you come to get your taxes done for you. we are continuing to invest in expanding our brand equity from do-it-yourself taxes to this is where you come to get your taxes done for you And we are starting to market early because 30% of people who do their tax-assisted way make the decision in the fall, well before January, when we traditionally market. and we are starting to market early because 30% of people who do their tax-assisted way make the decision in the fall well before january when we traditionally market We learned from last year. we learned from last year We honed our marketing this year. And now we're also making it that much warmer, that the leads we got in the fall, we're keeping them warm all the way till February, March, when they'll start doing their filing. So that's one. Secondly, showing up local. Local matters tremendously when it comes to assisted taxes. People are looking for tax preparer near me. And we had 400 locations last year. But the big thing was we didn't start showing up organically in Google Search, Yelp Search until March, because we needed reviews. We needed to verify the locations. So I didn't have the full season of benefit last year. This year we get the full season of benefit. And instead of 400 locations, we have 600 locations. And we know local matters tremendously, 5x better conversion, and just the confidence that people have. We honed our marketing this year. we honed our marketing this year And now we're also making it that much warmer, that the leads we got in the fall, we're keeping them warm all the way till February, March, when they'll start doing their filing. and now we're also making it that much warmer that the leads we got in the fall we're keeping them warm all the way till february march when they'll start doing their filing So that's one. so that's one Secondly, showing up local. secondly showing up local Local matters tremendously when it comes to assisted taxes. local matters tremendously when it comes to assisted taxes People are looking for tax preparer near me. people are looking for tax preparer near me And we had 400 locations last year. and we had 400 locations last year But the big thing was we didn't start showing up organically in Google Search, Yelp Search until March, because we needed reviews. but the big thing was we didn't start showing up organically in google search yelp search until march because we needed reviews We needed to verify the locations. we needed to verify the locations So I didn't have the full season of benefit last year. so i didn't have the full season of benefit last year This year we get the full season of benefit. this year we get the full season of benefit And instead of 400 locations, we have 600 locations. and instead of 400 locations we have 600 locations And we know local matters tremendously, 5x better conversion, and just the confidence that people have. and we know local matters tremendously 5x better conversion and just the confidence that people have And thirdly is the better-together experience with Credit Karma. You have 40 million monthly active users on Credit Karma. Most of them are not using us to do their taxes. So that's a massive opportunity for us to get them from Credit Karma into TurboTax and have their taxes done in a very bespoke, beneficial way to where they feel that they are part of that one ecosystem, whether it's getting their taxes done in a matter of minutes, but most importantly, getting access to their money quickly through Credit Karma Money. And thirdly is the better-together experience with Credit Karma. and thirdly is the better-together experience with credit karma You have 40 million monthly active users on Credit Karma. you have 40 million monthly active users on credit karma Most of them are not using us to do their taxes. most of them are not using us to do their taxes So that's a massive opportunity for us to get them from Credit Karma into TurboTax and have their taxes done in a very bespoke, beneficial way to where they feel that they are part of that one ecosystem, whether it's getting their taxes done in a matter of minutes, but most importantly, getting access to their money quickly through Credit Karma Money. so that's a massive opportunity for us to get them from credit karma into turbotax and have their taxes done in a very bespoke beneficial way to where they feel that they are part of that one ecosystem whether it's getting their taxes done in a matter of minutes but most importantly getting access to their money quickly through credit karma money

Speaker 1: Got it. I want to double-click on the assisted side of the equation. That was really, from my perspective, the eye-popping number in the tax results last year, how well you guys accelerated that live program, and assisted was a big part of that, and what's so important about that is the expansion of the market opportunity, so correct me if I'm wrong, but I think we've talked about DIY is about a $5 billion annual opportunity, getting into assisted takes you to $35 billion. Got it. got it I want to double-click on the assisted side of the equation. i want to double-click on the assisted side of the equation That was really, from my perspective, the eye-popping number in the tax results last year, how well you guys accelerated that live program, and assisted was a big part of that, and what's so important about that is the expansion of the market opportunity, so correct me if I'm wrong, but I think we've talked about DIY is about a $5 billion annual opportunity, getting into assisted takes you to $35 billion. that was really from my perspective the eye-popping number in the tax results last year how well you guys accelerated that live program and assisted was a big part of that and what's so important about that is the expansion of the market opportunity so correct me if i'm wrong but i think we've talked about diy is about a $5 billion annual opportunity getting into assisted takes you to $35 billion

Speaker 2: That's right. That's right. that's right

Speaker 1: Right, so a big expansion. The localization, there's always something that piques my interest, but also gets me a little bit worried with Intuit. When you guys went into assisted as a software analyst, we're like, wait a second. People are getting involved in the equation. Is that going to be more expensive? Is that going to be higher gross margins? But with the live offering over the past couple of years, you guys have proven out an ability to do live at very good gross margins. Now the more recent one is localization. The storefronts popping up that Intuit is part of the Intuit network. Should we be worried about that dragging on gross margins or dragging on OpEx and making it less profitable for Intuit overall? Right, so a big expansion. right so a big expansion The localization, there's always something that piques my interest, but also gets me a little bit worried with Intuit. the localization there's always something that piques my interest but also gets me a little bit worried with intuit When you guys went into assisted as a software analyst, we're like, wait a second. when you guys went into assisted as a software analyst we're like wait a second People are getting involved in the equation. people are getting involved in the equation Is that going to be more expensive? is that going to be more expensive Is that going to be higher gross margins? is that going to be higher gross margins But with the live offering over the past couple of years, you guys have proven out an ability to do live at very good gross margins. but with the live offering over the past couple of years you guys have proven out an ability to do live at very good gross margins Now the more recent one is localization. now the more recent one is localization The storefronts popping up that Intuit is part of the Intuit network. the storefronts popping up that intuit is part of the intuit network Should we be worried about that dragging on gross margins or dragging on OpEx and making it less profitable for Intuit overall? should we be worried about that dragging on gross margins or dragging on opex and making it less profitable for intuit overall

Speaker 2: Yeah. I'll start at the top. You should not, and the investors should not be worried about our ability to continue to grow our revenues faster than expenses, which is our top two financial principles, thereby leading to margin expansion. Now let me get into your question around real estate and localization. Local matters a lot when it comes to unlocking the $35 billion assisted tax category. And what matters in local is that folks just want to have the confidence that there's a tax preparer near them if they want to show up in person. As an example, I wanted to make sure that my Morgan Stanley advisor was near me, even though I've rarely interacted in person, and I just do it over Zoom. And our full-service customers even tell us to that effect that 39% of them just want a zero-touch experience. Yeah. yeah I'll start at the top. i'll start at the top You should not, and the investors should not be worried about our ability to continue to grow our revenues faster than expenses, which is our top two financial principles, thereby leading to margin expansion. you should not and the investors should not be worried about our ability to continue to grow our revenues faster than expenses which is our top two financial principles thereby leading to margin expansion Now let me get into your question around real estate and localization. now let me get into your question around real estate and localization Local matters a lot when it comes to unlocking the $35 billion assisted tax category. local matters a lot when it comes to unlocking the $35 billion assisted tax category And what matters in local is that folks just want to have the confidence that there's a tax preparer near them if they want to show up in person. and what matters in local is that folks just want to have the confidence that there's a tax preparer near them if they want to show up in person As an example, I wanted to make sure that my Morgan Stanley advisor was near me, even though I've rarely interacted in person, and I just do it over Zoom. as an example i wanted to make sure that my morgan stanley advisor was near me even though i've rarely interacted in person and i just do it over zoom And our full-service customers even tell us to that effect that 39% of them just want a zero-touch experience. and our full-service customers even tell us to that effect that 39% of them just want a zero-touch experience But they just want the confidence of having someone local, and we see that manifest in 5x better conversion, so with that, local is important, but we wanted to do it in a very asset-light way, so the 600 locations we have, they are short-term, a year, a couple-year type of leases. They're asset-light. They're not a big expense. They're all part of the guidance, and as I look at the ROI on the spend and how it manifests itself in better conversion and the growth in assisted, it's a very solid ROI as well, so it's an area that I think is very much on strategy, and it being asset-light makes sure that we continue to have the software-like margins that we've been enjoying. But they just want the confidence of having someone local, and we see that manifest in 5x better conversion, so with that, local is important, but we wanted to do it in a very asset-light way, so the 600 locations we have, they are short-term, a year, a couple-year type of leases. but they just want the confidence of having someone local and we see that manifest in 5x better conversion so with that local is important but we wanted to do it in a very asset-light way so the 600 locations we have they are short-term a year a couple-year type of leases They're asset-light. they're asset-light They're not a big expense. they're not a big expense They're all part of the guidance, and as I look at the ROI on the spend and how it manifests itself in better conversion and the growth in assisted, it's a very solid ROI as well, so it's an area that I think is very much on strategy, and it being asset-light makes sure that we continue to have the software-like margins that we've been enjoying. they're all part of the guidance and as i look at the roi on the spend and how it manifests itself in better conversion and the growth in assisted it's a very solid roi as well so it's an area that i think is very much on strategy and it being asset-light makes sure that we continue to have the software-like margins that we've been enjoying

Speaker 1: Got it. Got it. And you talked about the expansion from 400 locations to 600 locations. The rationale being if there's an advisor within 50 mi of the potential tax customer, there's a 5x conversion, right? Is there some formula that we should be doing in terms of understanding the extent of is it going to go to 600 locations to 800 or 600 to 6,000 based upon that 50 mi radius? Got it. got it Got it. got it And you talked about the expansion from 400 locations to 600 locations. and you talked about the expansion from 400 locations to 600 locations The rationale being if there's an advisor within 50 mi of the potential tax customer, there's a 5x conversion, right? the rationale being if there's an advisor within 50 mi of the potential tax customer there's a 5x conversion right Is there some formula that we should be doing in terms of understanding the extent of is it going to go to 600 locations to 800 or 600 to 6,000 based upon that 50 mi radius? is there some formula that we should be doing in terms of understanding the extent of is it going to go to 600 locations to 800 or 600 to 6,000 based upon that 50 mi radius

Speaker 2: Yeah. I think the way to look at it is if you look at the U.S. population, this is a larger U.S. discussion around assisted tax at this time. There are select markets where the concentration of population is. So the 600 may go up a little bit, but it's not going to go up multiples. Right? So right now, as I've talked to our go-to-market teams, the 600 feels like a pretty solid number. It'll be till the 600, and I wouldn't worry too much about us meaningfully expanding that in the near-to-intermediate term. Yeah. yeah I think the way to look at it is if you look at the U.S. population, this is a larger U.S. discussion around assisted tax at this time. i think the way to look at it is if you look at the u.s population this is a larger u.s discussion around assisted tax at this time There are select markets where the concentration of population is. there are select markets where the concentration of population is So the 600 may go up a little bit, but it's not going to go up multiples. so the 600 may go up a little bit but it's not going to go up multiples Right? right So right now, as I've talked to our go-to-market teams, the 600 feels like a pretty solid number. so right now as i've talked to our go-to-market teams the 600 feels like a pretty solid number It'll be till the 600, and I wouldn't worry too much about us meaningfully expanding that in the near- to- intermediate term. it'll be till the 600 and i wouldn't worry too much about us meaningfully expanding that in the near- to- intermediate term

Speaker 1: Got it. Got it. So when we're talking about the opportunity on assisted, maybe you can help us compare and contrast sort of the journey that an assisted customer takes versus the journey that a DIY customer takes. So we've been trained by Intuit to think about top-of-funnel, about free-to-paid conversion. With assisted, what's the dynamics in terms of getting an assisted customer to switch from his current relationship? Because they have some relationship that sort of makes them assisted to use an alternative product like Intuit. Got it. got it Got it. got it So when we're talking about the opportunity on assisted, maybe you can help us compare and contrast sort of the journey that an assisted customer takes versus the journey that a DIY customer takes. so when we're talking about the opportunity on assisted maybe you can help us compare and contrast sort of the journey that an assisted customer takes versus the journey that a diy customer takes So we've been trained by Intuit to think about top-of-funnel, about free-to-paid conversion. so we've been trained by intuit to think about top-of-funnel about free-to-paid conversion With assisted, what's the dynamics in terms of getting an assisted customer to switch from his current relationship? with assisted what's the dynamics in terms of getting an assisted customer to switch from his current relationship Because they have some relationship that sort of makes them assisted to use an alternative product like Intuit. because they have some relationship that sort of makes them assisted to use an alternative product like intuit

Speaker 2: Yeah. So there are around 11 million customers that switch every year. And the primary catalyst for them to switch is typically that they had a less-than-ideal experience with their preparer this year. Or the secondary is that their complexity increased. For example, they bought a house. So for me, my kids started going to college. And how does that play into my taxes? And I want to talk to a tax advisor. And the way the experience works is they typically look for a preparer. It usually starts with either a search like tax preparer near me, or they look for word-of-mouth type recommendations. And that's where we want to make sure we're showing up both in terms of local as well as early marketing because most of them are going to have that less-than-ideal experience around the fall when they're doing their tax filing. And they'll show up. Yeah. yeah So there are around 11 million customers that switch every year. so there are around 11 million customers that switch every year And the primary catalyst for them to switch is typically that they had a less-than-ideal experience with their preparer this year. and the primary catalyst for them to switch is typically that they had a less-than-ideal experience with their preparer this year Or the secondary is that their complexity increased. or the secondary is that their complexity increased For example, they bought a house. for example they bought a house So for me, my kids started going to college. so for me my kids started going to college And how does that play into my taxes? and how does that play into my taxes And I want to talk to a tax advisor. and i want to talk to a tax advisor And the way the experience works is they typically look for a preparer. and the way the experience works is they typically look for a preparer It usually starts with either a search like tax preparer near me, or they look for word-of-mouth type recommendations. it usually starts with either a search like tax preparer near me or they look for word-of-mouth type recommendations And that's where we want to make sure we're showing up both in terms of local as well as early marketing because most of them are going to have that less-than-ideal experience around the fall when they're doing their tax filing. and that's where we want to make sure we're showing up both in terms of local as well as early marketing because most of them are going to have that less-than-ideal experience around the fall when they're doing their tax filing And they'll show up. and they'll show up They'll reach out, and we'll get them in touch with an expert that will share with them what the experience is, what the pricing could look like, and how we do the assisted tax filing, and then lead them into opening up an Intuit account and continuing that journey with us. That's the typical approach for the assisted area. On the do-it-yourself, folks will typically start out, go online, try to find what's the best tax preparation software, depending on their level of complexity. Some are free. Some want to get a premium offering, such as our TurboTax Deluxe. Some will want to talk to an expert to have a question or two, so that's a more broader spectrum of the level of engagement, whereas assisted very much starts out by them looking for a preparer and wanting to engage with a human being. They'll reach out, and we'll get them in touch with an expert that will share with them what the experience is, what the pricing could look like, and how we do the assisted tax filing, and then lead them into opening up an Intuit account and continuing that journey with us. they'll reach out and we'll get them in touch with an expert that will share with them what the experience is what the pricing could look like and how we do the assisted tax filing and then lead them into opening up an intuit account and continuing that journey with us That's the typical approach for the assisted area. that's the typical approach for the assisted area On the do-it-yourself, folks will typically start out, go online, try to find what's the best tax preparation software, depending on their level of complexity. on the do-it-yourself folks will typically start out go online try to find what's the best tax preparation software depending on their level of complexity Some are free. some are free Some want to get a premium offering, such as our TurboTax Deluxe. some want to get a premium offering such as our turbotax deluxe Some will want to talk to an expert to have a question or two, so that's a more broader spectrum of the level of engagement, whereas assisted very much starts out by them looking for a preparer and wanting to engage with a human being. some will want to talk to an expert to have a question or two so that's a more broader spectrum of the level of engagement whereas assisted very much starts out by them looking for a preparer and wanting to engage with a human being

Speaker 1: Got it. Got it. got it

Speaker 2: Traditional service-oriented model. Traditional service-oriented model. traditional service-oriented model

Speaker 1: Got it. Let's talk briefly about sustaining the top-of-funnel when it comes to the DIY side of the equation. We've talked for a long time about sort of free being a good top-of-funnel mechanism. Last year, you guys saw an additional decline. I think it was about a 2 million unit decline in the paying-nothing customers. Is that something we should be concerned about in terms of maybe the top-of-funnel is getting skinnier? Or are you guys just being more selective in terms of who you're targeting based upon what you know about who's more likely to convert? Got it. got it Let's talk briefly about sustaining the top-of-funnel when it comes to the DIY side of the equation. let's talk briefly about sustaining the top-of-funnel when it comes to the diy side of the equation We've talked for a long time about sort of free being a good top-of-funnel mechanism. we've talked for a long time about sort of free being a good top-of-funnel mechanism Last year, you guys saw an additional decline. last year you guys saw an additional decline I think it was about a 2 million unit decline in the paying- nothing customers. i think it was about a 2 million unit decline in the paying- nothing customers Is that something we should be concerned about in terms of maybe the top-of-funnel is getting skinnier? is that something we should be concerned about in terms of maybe the top-of-funnel is getting skinnier Or are you guys just being more selective in terms of who you're targeting based upon what you know about who's more likely to convert? or are you guys just being more selective in terms of who you're targeting based upon what you know about who's more likely to convert

Speaker 2: Our strategy when it comes to taxes is quite simple. Disrupt the assisted tax category. Maintain our dollar share in DIY. And that's what you'll see us execute. This past year, we were deliberate about investing in our marketing campaign to expand the brand equity, as I shared earlier, from DIY to this is how you do taxes, meaning we could do the taxes for you. And as part of that strategy, we saw some less units on DIY. We also saw some DIY customers switch to assisted tax as their complexity evolved a bit. Our strategy when it comes to taxes is quite simple. our strategy when it comes to taxes is quite simple Disrupt the assisted tax category. disrupt the assisted tax category Maintain our dollar share in DIY. maintain our dollar share in diy And that's what you'll see us execute. and that's what you'll see us execute This past year, we were deliberate about investing in our marketing campaign to expand the brand equity, as I shared earlier, from DIY to this is how you do taxes, meaning we could do the taxes for you. this past year we were deliberate about investing in our marketing campaign to expand the brand equity as i shared earlier from diy to this is how you do taxes meaning we could do the taxes for you And as part of that strategy, we saw some less units on DIY. and as part of that strategy we saw some less units on diy We also saw some DIY customers switch to assisted tax as their complexity evolved a bit. we also saw some diy customers switch to assisted tax as their complexity evolved a bit But looking ahead, I feel confident in our ability to both disrupt and grow the assisted tax category as well as maintain our dollar share in DIY across delivering value, delivering superior experiences, helping customers get their taxes done 12% faster as we did this past year, half the customers getting their tax done in less than an hour. All these things matter tremendously to the simple filer who's doing DIY or free, and also keep in mind, Credit Karma is a big funnel here for us. Those 40+ million monthly active users, many of them not doing their taxes with us, are in the category such as a sub-$100K income band. That is a part of the area that we need to make sure that we are having success with to maintain our dollar share in DIY. But looking ahead, I feel confident in our ability to both disrupt and grow the assisted tax category as well as maintain our dollar share in DIY across delivering value, delivering superior experiences, helping customers get their taxes done 12% faster as we did this past year, half the customers getting their tax done in less than an hour. but looking ahead i feel confident in our ability to both disrupt and grow the assisted tax category as well as maintain our dollar share in diy across delivering value delivering superior experiences helping customers get their taxes done 12% faster as we did this past year half the customers getting their tax done in less than an hour All these things matter tremendously to the simple filer who's doing DIY or free, and also keep in mind, Credit Karma is a big funnel here for us. all these things matter tremendously to the simple filer who's doing diy or free and also keep in mind credit karma is a big funnel here for us Those 40+ million monthly active users, many of them not doing their taxes with us, are in the category such as a sub-$100K income band. those 40+ million monthly active users many of them not doing their taxes with us are in the category such as a sub-$100k income band That is a part of the area that we need to make sure that we are having success with to maintain our dollar share in DIY. that is a part of the area that we need to make sure that we are having success with to maintain our dollar share in diy

Speaker 1: Got it, and I guess the other side of the equation is also retention. Improving retention is a great way to keep up units. Can you talk to us about how trends in retention have been going over the past couple of years and what you guys can do to improve that retention over time? Got it, and I guess the other side of the equation is also retention. got it and i guess the other side of the equation is also retention Improving retention is a great way to keep up units. improving retention is a great way to keep up units Can you talk to us about how trends in retention have been going over the past couple of years and what you guys can do to improve that retention over time? can you talk to us about how trends in retention have been going over the past couple of years and what you guys can do to improve that retention over time

Speaker 2: Yeah. The way we think about retention is retention on our platform. So less about DIY versus assisted. As I shared earlier, I may be assisted this year just because of increased complexity. And next year, my complexity is status quo. And I go back to DIY. Our retention is quite high. It's near 80%, almost like a SaaS-type model. In fact, one of the most amazing things for me is when I was onboarding and learning more about the tax business is that folks think of this as an episodic annual engagement. It very much behaves like a SaaS model because people have an amazing experience. And most of them come back the next year. And that shows up in the strong retention we have. Yeah. yeah The way we think about retention is retention on our platform. the way we think about retention is retention on our platform So less about DIY versus assisted. so less about diy versus assisted As I shared earlier, I may be assisted this year just because of increased complexity. as i shared earlier i may be assisted this year just because of increased complexity And next year, my complexity is status quo. and next year my complexity is status quo And I go back to DIY. and i go back to diy Our retention is quite high. our retention is quite high It's near 80%, almost like a SaaS-type model. it's near 80% almost like a saas-type model In fact, one of the most amazing things for me is when I was onboarding and learning more about the tax business is that folks think of this as an episodic annual engagement. in fact one of the most amazing things for me is when i was onboarding and learning more about the tax business is that folks think of this as an episodic annual engagement It very much behaves like a SaaS model because people have an amazing experience. it very much behaves like a saas model because people have an amazing experience And most of them come back the next year. and most of them come back the next year And that shows up in the strong retention we have. and that shows up in the strong retention we have

Speaker 1: Got it. Got it. You mentioned Credit Karma. We can use that as a little bit of a pivot to the broader business. How much juice is there left to squeeze in that? You guys have had Credit Karma on board for a couple of years now. You've had programs to sort of bring the two together and use Credit Karma as that lead generation tool for tax. Is there anything new, any new dynamics in that that's going to enable that relationship to keep yielding, if you will, for TurboTax? Got it. got it Got it. got it You mentioned Credit Karma. you mentioned credit karma We can use that as a little bit of a pivot to the broader business. we can use that as a little bit of a pivot to the broader business How much juice is there left to squeeze in that? how much juice is there left to squeeze in that You guys have had Credit Karma on board for a couple of years now. you guys have had credit karma on board for a couple of years now You've had programs to sort of bring the two together and use Credit Karma as that lead generation tool for tax. you've had programs to sort of bring the two together and use credit karma as that lead generation tool for tax Is there anything new, any new dynamics in that that's going to enable that relationship to keep yielding, if you will, for TurboTax? is there anything new any new dynamics in that that's going to enable that relationship to keep yielding if you will for turbotax

Speaker 2: Yeah. You know, Credit Karma is giving us a lot of juice, and there's plenty more to get for years to come. The business grew 27%, as you know, this past quarter. It's been growing north of 18% CAGR since we acquired it. And we continue to have success in delivering innovations to our partners. We continue to take more share of their spend. And in our customers, just getting a superior experience on our platform. As I look forward, we have a massive opportunity to continue to unlock the prime segment. We are getting more prime-oriented inventory, for example, cards that would be applicable to them. We are bringing in innovations such as my cards, where many of us who are prime customers want to be able to track our credit card rewards and see how to maximize those benefits. We're building that on there. Yeah. yeah You know, Credit Karma is giving us a lot of juice, and there's plenty more to get for years to come. you know credit karma is giving us a lot of juice and there's plenty more to get for years to come The business grew 27%, as you know, this past quarter. the business grew 27% as you know this past quarter It's been growing north of 18% CAGR since we acquired it. it's been growing north of 18% cagr since we acquired it And we continue to have success in delivering innovations to our partners. and we continue to have success in delivering innovations to our partners We continue to take more share of their spend. we continue to take more share of their spend And in our customers, just getting a superior experience on our platform. and in our customers just getting a superior experience on our platform As I look forward, we have a massive opportunity to continue to unlock the prime segment. as i look forward we have a massive opportunity to continue to unlock the prime segment We are getting more prime-oriented inventory, for example, cards that would be applicable to them. we are getting more prime-oriented inventory for example cards that would be applicable to them We are bringing in innovations such as my cards, where many of us who are prime customers want to be able to track our credit card rewards and see how to maximize those benefits. we are bringing in innovations such as my cards where many of us who are prime customers want to be able to track our credit card rewards and see how to maximize those benefits We're building that on there. we're building that on there And we are also going to be looking at expanding into new growth verticals, such as HELOCs, home equity loans, or mortgages to complement the verticals we have across credit cards, personal loans, and insurance. So much to go across Credit Karma. But the bigger opportunity for opening up the aperture is across the consumer ecosystem. Last year, Credit Karma gave a contributing point of growth to TurboTax. I think there's much more to come there. And that's going to come from us getting those 40+ million monthly active users to file with TurboTax, getting their refund put into Credit Karma Money, driving the year-round engagement. And that's going to be the powerful unlock that you'll see start to manifest this year and continue to gain momentum in the years ahead. And we are also going to be looking at expanding into new growth verticals, such as HELOCs, home equity loans, or mortgages to complement the verticals we have across credit cards, personal loans, and insurance. and we are also going to be looking at expanding into new growth verticals such as helocs home equity loans or mortgages to complement the verticals we have across credit cards personal loans and insurance So much to go across Credit Karma. so much to go across credit karma But the bigger opportunity for opening up the aperture is across the consumer ecosystem. but the bigger opportunity for opening up the aperture is across the consumer ecosystem Last year, Credit Karma gave a contributing point of growth to TurboTax. last year credit karma gave a contributing point of growth to turbotax I think there's much more to come there. i think there's much more to come there And that's going to come from us getting those 40+ million monthly active users to file with TurboTax, getting their refund put into Credit Karma Money, driving the year-round engagement. and that's going to come from us getting those 40+ million monthly active users to file with turbotax getting their refund put into credit karma money driving the year-round engagement And that's going to be the powerful unlock that you'll see start to manifest this year and continue to gain momentum in the years ahead. and that's going to be the powerful unlock that you'll see start to manifest this year and continue to gain momentum in the years ahead

Speaker 1: Got it. Got it. A lot to talk to in both Credit Karma and TurboTax. But I want to make sure that we focus some on the global business solution segment. Also, a lot going on there. So to me, the big story, right, in Intuit is this move-up market. We've been moving up market for a while now. We've gone QBO, QBO Advanced. But now we have Intuit Enterprise Suite, right? Can you talk to us about what the Intuit Enterprise Suite enables, where it lets you go in terms of customer size, market opportunity versus what you're able to achieve, where you're able to go with the QuickBooks Online Advanced? Got it. got it Got it. got it A lot to talk to in both Credit Karma and TurboTax. a lot to talk to in both credit karma and turbotax But I want to make sure that we focus some on the global business solution segment. but i want to make sure that we focus some on the global business solution segment Also, a lot going on there. also a lot going on there So to me, the big story, right, in Intuit is this move-up market. so to me the big story right in intuit is this move-up market We've been moving up market for a while now. we've been moving up market for a while now We've gone QBO, QBO Advanced. we've gone qbo qbo advanced But now we have Intuit Enterprise Suite, right? but now we have intuit enterprise suite right Can you talk to us about what the Intuit Enterprise Suite enables, where it lets you go in terms of customer size, market opportunity versus what you're able to achieve, where you're able to go with the QuickBooks Online Advanced? can you talk to us about what the intuit enterprise suite enables where it lets you go in terms of customer size market opportunity versus what you're able to achieve where you're able to go with the quickbooks online advanced

Speaker 2: Sure. You know, traditionally, the QuickBooks business served the small businesses. They would grow with us. And you have businesses from new start-ups up to $2.5 million, $5-ish million-dollar opportunity set. And we see an opportunity to go into the mid-market that we define as customers making $2.5 million-$100 million in revenue. And that's not a very steadfast bar. We can serve customers well over $100 million. But that revenue represents the complexity of those customers. Advanced works exceptionally well for those up to $10 million. Once you get above $10 million, your complexity sets in. You have multiple jurisdictions. You have multiple entities. You're doing cross-border transactions. You're doing multiple currencies. And that's where IES is really resonating for those customers who make over $10 million in revenue. Sure. sure You know, traditionally, the QuickBooks business served the small businesses. you know traditionally the quickbooks business served the small businesses They would grow with us. they would grow with us And you have businesses from new start-ups up to $2.5 million, $5-ish million-dollar opportunity set. and you have businesses from new start-ups up to $2.5 million, $5-ish million-dollar opportunity set And we see an opportunity to go into the mid-market that we define as customers making $2.5 million-$100 million in revenue. and we see an opportunity to go into the mid-market that we define as customers making $2.5 million-$100 million in revenue And that's not a very steadfast bar. and that's not a very steadfast bar We can serve customers well over $100 million. we can serve customers well over $100 million But that revenue represents the complexity of those customers. but that revenue represents the complexity of those customers Advanced works exceptionally well for those up to $10 million. advanced works exceptionally well for those up to $10 million Once you get above $10 million, your complexity sets in. once you get above $10 million your complexity sets in You have multiple jurisdictions. you have multiple jurisdictions You have multiple entities. you have multiple entities You're doing cross-border transactions. you're doing cross-border transactions You're doing multiple currencies. you're doing multiple currencies And that's where IES is really resonating for those customers who make over $10 million in revenue. and that's where ies is really resonating for those customers who make over $10 million in revenue We are focused on four primary verticals right now: construction and field services, nonprofits, professional services, and manufacturing and wholesale, and having good success there. Our quarterly product releases are resonating well. The July product release resonated strongly. We shared that contracts were up 50% from Q4 to Q1 as a result of that. We pushed out the November release, and that's continued to drive product-market fit, so solid momentum in that business. What also excites me is the improvements we're making in the go-to-market side. Our sales force, around 250, their productivity continues to go up, and that's giving us the confidence that we'll be scaling that sales force as we exit the year, and secondly, the partnerships that we're doing with the large accounting firms, particularly the tech-forward firms. We are focused on four primary verticals right now: construction and field services, nonprofits, professional services, and manufacturing and wholesale, and having good success there. we are focused on four primary verticals right now construction and field services nonprofits professional services and manufacturing and wholesale and having good success there Our quarterly product releases are resonating well. our quarterly product releases are resonating well The July product release resonated strongly. the july product release resonated strongly We shared that contracts were up 50% from Q4 to Q1 as a result of that. we shared that contracts were up 50% from q4 to q1 as a result of that We pushed out the November release, and that's continued to drive product-market fit, so solid momentum in that business. we pushed out the november release and that's continued to drive product-market fit so solid momentum in that business What also excites me is the improvements we're making in the go-to-market side. what also excites me is the improvements we're making in the go-to-market side Our sales force, around 250, their productivity continues to go up, and that's giving us the confidence that we'll be scaling that sales force as we exit the year, and secondly, the partnerships that we're doing with the large accounting firms, particularly the tech-forward firms. our sales force around 250 their productivity continues to go up and that's giving us the confidence that we'll be scaling that sales force as we exit the year and secondly the partnerships that we're doing with the large accounting firms particularly the tech-forward firms They are eager to get new logos onto our platform, onto IES, because they're seeing the benefit of cost of ownership, the onboarding, the ease of use. There's a lot of momentum getting built in IES. That's driving our confidence in what that's going to impact, that's going to have on the P&L in the years ahead. They are eager to get new logos onto our platform, onto IES, because they're seeing the benefit of cost of ownership, the onboarding, the ease of use. they are eager to get new logos onto our platform onto ies because they're seeing the benefit of cost of ownership the onboarding the ease of use There's a lot of momentum getting built in IES. there's a lot of momentum getting built in ies That's driving our confidence in what that's going to impact, that's going to have on the P&L in the years ahead. that's driving our confidence in what that's going to impact that's going to have on the p&l in the years ahead

Speaker 1: Got it. Got it. In that go-to-market strategy, I think you could course-correct me a little bit because I've been focusing a lot on the opportunity within the base, right, to basically better retain graduates. Like the companies that exceeded that 10 million, they would go to a competitor because they didn't have the ability to consolidate or some higher-level functionality. How should we think about the opportunity and the go-to-market focus of retaining the base versus, like you were talking about, actually going out and getting net new customers to the platform? Got it. got it Got it. got it In that go-to-market strategy, I think you could course-correct me a little bit because I've been focusing a lot on the opportunity within the base, right, to basically better retain graduates. in that go-to-market strategy i think you could course-correct me a little bit because i've been focusing a lot on the opportunity within the base right to basically better retain graduates Like the companies that exceeded that 10 million, they would go to a competitor because they didn't have the ability to consolidate or some higher-level functionality. like the companies that exceeded that 10 million they would go to a competitor because they didn't have the ability to consolidate or some higher-level functionality How should we think about the opportunity and the go-to-market focus of retaining the base versus, like you were talking about, actually going out and getting net new customers to the platform? how should we think about the opportunity and the go-to-market focus of retaining the base versus like you were talking about actually going out and getting net new customers to the platform

Speaker 2: Yeah. I think they're both massive opportunities for us in terms of driving the top-line growth. So when you look at customers or businesses in $2.5 million-$100 million range, there are about 1.7 million of them out there. 800,000 of them are already in our base, using non-mid-market-oriented products within QuickBooks. So that's an opportunity for us to upgrade them to the products that are more suitable for their needs, whether it's QuickBooks Advanced or IES. And that's been a larger focus, about 80%-90%, depending on the month, of our deals that are coming from those customers upgrading. And we're seeing them pay 2x more when they upgrade because they're getting an auto-managed better product. And the beauty of this is that our sales force is having conversations with them. Yeah. yeah I think they're both massive opportunities for us in terms of driving the top-line growth. i think they're both massive opportunities for us in terms of driving the top-line growth So when you look at customers or businesses in $2.5 million-$100 million range, there are about 1.7 million of them out there. 800,000 of them are already in our base, using non-mid-market-oriented products within QuickBooks. so when you look at customers or businesses in $2.5 million-$100 million range there are about 1.7 million of them out there 800,000 of them are already in our base using non-mid-market-oriented products within quickbooks So that's an opportunity for us to upgrade them to the products that are more suitable for their needs, whether it's QuickBooks Advanced or IES. so that's an opportunity for us to upgrade them to the products that are more suitable for their needs whether it's quickbooks advanced or ies And that's been a larger focus, about 80%-90%, depending on the month, of our deals that are coming from those customers upgrading. and that's been a larger focus about 80%-90% depending on the month of our deals that are coming from those customers upgrading And we're seeing them pay 2x more when they upgrade because they're getting an auto-managed better product. and we're seeing them pay 2x more when they upgrade because they're getting an auto-managed better product And the beauty of this is that our sales force is having conversations with them. and the beauty of this is that our sales force is having conversations with them We're getting them to not just upgrade the ERP, but also discover parts of the platform, such as payments, payroll, that they could be attaching, which meaningfully drives up the ARPC that we're getting. That's been the focus. We're also having our sales force sharpen their teeth by going out and hunting for new accounts. We're having success. We're winning some from competitors. There are also plenty of greenfield opportunity people who haven't adopted financial management software, who are coming in and using IES. In fact, most of the growth of the new logos is people who don't have financial management software. That's, I think, going to be unlocked. Like any growth journey, keep in mind, we've only been in the market for about 14 months with IES. We're getting them to not just upgrade the ERP, but also discover parts of the platform, such as payments, payroll, that they could be attaching, which meaningfully drives up the ARPC that we're getting. we're getting them to not just upgrade the erp but also discover parts of the platform such as payments payroll that they could be attaching which meaningfully drives up the arpc that we're getting That's been the focus. that's been the focus We're also having our sales force sharpen their teeth by going out and hunting for new accounts. we're also having our sales force sharpen their teeth by going out and hunting for new accounts We're having success. we're having success We're winning some from competitors. we're winning some from competitors There are also plenty of greenfield opportunity people who haven't adopted financial management software, who are coming in and using IES. there are also plenty of greenfield opportunity people who haven't adopted financial management software who are coming in and using ies In fact, most of the growth of the new logos is people who don't have financial management software. in fact most of the growth of the new logos is people who don't have financial management software That's, I think, going to be unlocked. that's i think going to be unlocked Like any growth journey, keep in mind, we've only been in the market for about 14 months with IES. like any growth journey keep in mind we've only been in the market for about 14 months with ies You have to hone in your selling motions on the existing base and the upgrade cycle, and then go external for the new logos. That's going to be the journey we take here. And the accounting partnerships are going to be a massive tailwind in driving the new logos because they're having those conversations with the potential new customers. They have a huge influence on the mid-market customer and what services platforms adopt. So I think that's going to be what will start showing up in the quarters ahead. You have to hone in your selling motions on the existing base and the upgrade cycle, and then go external for the new logos. you have to hone in your selling motions on the existing base and the upgrade cycle and then go external for the new logos That's going to be the journey we take here. that's going to be the journey we take here And the accounting partnerships are going to be a massive tailwind in driving the new logos because they're having those conversations with the potential new customers. and the accounting partnerships are going to be a massive tailwind in driving the new logos because they're having those conversations with the potential new customers They have a huge influence on the mid-market customer and what services platforms adopt. they have a huge influence on the mid-market customer and what services platforms adopt So I think that's going to be what will start showing up in the quarters ahead. so i think that's going to be what will start showing up in the quarters ahead

Speaker 1: Got it. And a couple of months back at Intuit Connect, you guys released the Intuit Accountant Suite. To what degree do these two kind of come together, giving the accounts a more robust kind of solution of their own to be able to better help you service a more complicated customer? Got it. got it And a couple of months back at Intuit Connect, you guys released the Intuit Accountant Suite. and a couple of months back at intuit connect you guys released the intuit accountant suite To what degree do these two kind of come together, giving the accounts a more robust kind of solution of their own to be able to better help you service a more complicated customer? to what degree do these two kind of come together giving the accounts a more robust kind of solution of their own to be able to better help you service a more complicated customer

Speaker 2: Yeah. You know, if you step back and reflect on an accounting firm, they are kind of a mid-market business themselves. They're a professional services organization. They are looking to consolidate their tech stack. They're looking to massively continue to improve the efficiency and the productivity of their workforce. And that's what we enable with IES. We can consolidate this and give them better visibility into their practice, where there's opportunities to unlock productivity, drive better partnership with how much their workforce does and how much they can outsource to us through our live experts. And this will be an opportunity for us to continue to deepen our partnership with accounting firms, but also give them an incentive to drive more business to us, particularly on the mid-market side. Yeah. yeah You know, if you step back and reflect on an accounting firm, they are kind of a mid-market business themselves. you know if you step back and reflect on an accounting firm they are kind of a mid-market business themselves They're a professional services organization. they're a professional services organization They are looking to consolidate their tech stack. they are looking to consolidate their tech stack They're looking to massively continue to improve the efficiency and the productivity of their workforce. they're looking to massively continue to improve the efficiency and the productivity of their workforce And that's what we enable with IES. and that's what we enable with ies We can consolidate this and give them better visibility into their practice, where there's opportunities to unlock productivity, drive better partnership with how much their workforce does and how much they can outsource to us through our live experts. we can consolidate this and give them better visibility into their practice where there's opportunities to unlock productivity drive better partnership with how much their workforce does and how much they can outsource to us through our live experts And this will be an opportunity for us to continue to deepen our partnership with accounting firms, but also give them an incentive to drive more business to us, particularly on the mid-market side. and this will be an opportunity for us to continue to deepen our partnership with accounting firms but also give them an incentive to drive more business to us particularly on the mid-market side

Speaker 1: Got it. You talked about online services, the potential for higher attach. If you wanted to give me a Christmas gift, attach rates would be a great Christmas gift in terms of Intuit. Got it. got it You talked about online services, the potential for higher attach. you talked about online services the potential for higher attach If you wanted to give me a Christmas gift, attach rates would be a great Christmas gift in terms of Intuit. if you wanted to give me a christmas gift attach rates would be a great christmas gift in terms of intuit

Speaker 2: I'll add to that list. I'll add to that list. i'll add to that list

Speaker 1: Excellent. Any color you could give us, one, just on sort of the attach rates and sort of the uplift that you see with the mid-market customers? Because it just naturally feels like they're larger customers. They have higher payment volumes. They have higher employee counts, right? There's a bigger opportunity for online services. So maybe talk about a lot of the services that have been around for a while, payments and payroll, but then also the opportunity from the agentic side of the equation because you guys have been rolling out a lot more functionality. How are we seeing that come into the P&L? Excellent. excellent Any color you could give us, one, just on sort of the attach rates and sort of the uplift that you see with the mid-market customers? any color you could give us one just on sort of the attach rates and sort of the uplift that you see with the mid-market customers Because it just naturally feels like they're larger customers. because it just naturally feels like they're larger customers They have higher payment volumes. they have higher payment volumes They have higher employee counts, right? they have higher employee counts right There's a bigger opportunity for online services. there's a bigger opportunity for online services So maybe talk about a lot of the services that have been around for a while, payments and payroll, but then also the opportunity from the agentic side of the equation because you guys have been rolling out a lot more functionality. so maybe talk about a lot of the services that have been around for a while payments and payroll but then also the opportunity from the agentic side of the equation because you guys have been rolling out a lot more functionality How are we seeing that come into the P&L? how are we seeing that come into the p&l

Speaker 2: Yeah. So you know, services excites me a lot because I view the services business as a call option on the success of our customers. As they scale and their payment volumes grow, they hire more employees. Our unit economics also continue to improve. And what we see, particularly with the mid-market customers, they tend to attach services a lot more. We see about nine points higher payroll attach. We see about seven points higher payments attach. And the other thing is that what our history has shown us is that when we put a human in touch with our customers, such as when a live expert is talking to the customers, our QuickBooks Live customers have around a 22-point higher attach rate of platform services than those who don't use QuickBooks Live. Yeah. yeah So you know, services excites me a lot because I view the services business as a call option on the success of our customers. so you know services excites me a lot because i view the services business as a call option on the success of our customers As they scale and their payment volumes grow, they hire more employees. as they scale and their payment volumes grow they hire more employees Our unit economics also continue to improve. our unit economics also continue to improve And what we see, particularly with the mid-market customers, they tend to attach services a lot more. and what we see particularly with the mid-market customers they tend to attach services a lot more We see about nine points higher payroll attach. we see about nine points higher payroll attach We see about seven points higher payments attach. we see about seven points higher payments attach And the other thing is that what our history has shown us is that when we put a human in touch with our customers, such as when a live expert is talking to the customers, our QuickBooks Live customers have around a 22-point higher attach rate of platform services than those who don't use QuickBooks Live. and the other thing is that what our history has shown us is that when we put a human in touch with our customers such as when a live expert is talking to the customers our quickbooks live customers have around a 22-point higher attach rate of platform services than those who don't use quickbooks live When you now think about the mid-market customers, they are talking to a salesperson who could truly unpack to them the power of the platform and how that could help this customer run their business more efficiently and improve their net working capital position and just utilize the platform to their benefit. That's the excitement that we have around mid-market and the services attach going forward. When you now think about the mid-market customers, they are talking to a salesperson who could truly unpack to them the power of the platform and how that could help this customer run their business more efficiently and improve their net working capital position and just utilize the platform to their benefit. when you now think about the mid-market customers they are talking to a salesperson who could truly unpack to them the power of the platform and how that could help this customer run their business more efficiently and improve their net working capital position and just utilize the platform to their benefit That's the excitement that we have around mid-market and the services attach going forward. that's the excitement that we have around mid-market and the services attach going forward

Speaker 1: Got it. Got it. The next extension of kind of that online services is going from what has traditionally been very much a back-office-focused platform, at least kind of in our nomenclature in financials, payroll, payments, to more CRM-focused with Mailchimp. Mailchimp has been, I would say, the more difficult child versus Credit Karma, which has worked splendidly well. Mailchimp has had some growing pains. But you guys are very confident in the potential for acceleration in Mailchimp into the back half of this year. Can you talk to us about some of the fixes that have been put in for Mailchimp to improve that product-market fit, maybe some of the early signs that you guys are seeing that gives you that confidence in an acceleration into or exiting this year? Got it. got it Got it. got it The next extension of kind of that online services is going from what has traditionally been very much a back-office-focused platform, at least kind of in our nomenclature in financials, payroll, payments, to more CRM-focused with Mailchimp. the next extension of kind of that online services is going from what has traditionally been very much a back-office-focused platform at least kind of in our nomenclature in financials payroll payments to more crm-focused with mailchimp Mailchimp has been, I would say, the more difficult child versus Credit Karma, which has worked splendidly well. mailchimp has been i would say the more difficult child versus credit karma which has worked splendidly well Mailchimp has had some growing pains. mailchimp has had some growing pains But you guys are very confident in the potential for acceleration in Mailchimp into the back half of this year. but you guys are very confident in the potential for acceleration in mailchimp into the back half of this year Can you talk to us about some of the fixes that have been put in for Mailchimp to improve that product-market fit, maybe some of the early signs that you guys are seeing that gives you that confidence in an acceleration into or exiting this year? can you talk to us about some of the fixes that have been put in for mailchimp to improve that product-market fit maybe some of the early signs that you guys are seeing that gives you that confidence in an acceleration into or exiting this year

Speaker 2: Yeah. You know, as I look at the Mailchimp business, there are strategic actions we've taken that give us the confidence in the potential ahead. We continue to see success with the mid-market customers. As we improve the functionality on that product, the mid-market customer's adoption has gone up. We've added more salespeople. That salespeople productivity is ramping up ahead of our own internal expectations. So that's an area of encouragement. Secondly, as we have rolled out new functions, features such as SMS, and just improved the onboarding flow, particularly for the small customers, where a lot of this problem developed as we built the functionality for the mid-market customers, we just made the onboarding flow and the discoverability of features to get the speed to benefit harder for the small customers. Yeah. yeah You know, as I look at the Mailchimp business, there are strategic actions we've taken that give us the confidence in the potential ahead. you know as i look at the mailchimp business there are strategic actions we've taken that give us the confidence in the potential ahead We continue to see success with the mid-market customers. we continue to see success with the mid-market customers As we improve the functionality on that product, the mid-market customer's adoption has gone up. as we improve the functionality on that product the mid-market customer's adoption has gone up We've added more salespeople. we've added more salespeople That salespeople productivity is ramping up ahead of our own internal expectations. that salespeople productivity is ramping up ahead of our own internal expectations So that's an area of encouragement. so that's an area of encouragement Secondly, as we have rolled out new functions, features such as SMS, and just improved the onboarding flow, particularly for the small customers, where a lot of this problem developed as we built the functionality for the mid-market customers, we just made the onboarding flow and the discoverability of features to get the speed to benefit harder for the small customers. secondly as we have rolled out new functions features such as sms and just improved the onboarding flow particularly for the small customers where a lot of this problem developed as we built the functionality for the mid-market customers we just made the onboarding flow and the discoverability of features to get the speed to benefit harder for the small customers I kind of compare it to, in your world, it's like someone wanted to go to Yahoo Finance to look up a stock quote. I put a Bloomberg Terminal in front of them, right, and we have now simplified that onboarding flow, and that's getting better product recommendation scores. Now we are dialing up the marketing spend, and the thesis is that as we dial up the marketing spend, the funnel continues to perform, and that drives the growth, and we'll start to see this play out a lot more in the February-March time frame. As you can imagine, right now, with the holiday season coming up, folks aren't looking at platform switching, but once we get past the holiday season into February-March, that's when we'll really start getting a solid read in how our thesis is playing out. I kind of compare it to, in your world, it's like someone wanted to go to Yahoo Finance to look up a stock quote. i kind of compare it to in your world it's like someone wanted to go to yahoo finance to look up a stock quote I put a Bloomberg Terminal in front of them, right, and we have now simplified that onboarding flow, and that's getting better product recommendation scores. i put a bloomberg terminal in front of them right and we have now simplified that onboarding flow and that's getting better product recommendation scores Now we are dialing up the marketing spend, and the thesis is that as we dial up the marketing spend, the funnel continues to perform, and that drives the growth, and we'll start to see this play out a lot more in the February-March time frame. now we are dialing up the marketing spend and the thesis is that as we dial up the marketing spend the funnel continues to perform and that drives the growth and we'll start to see this play out a lot more in the february-march time frame As you can imagine, right now, with the holiday season coming up, folks aren't looking at platform switching, but once we get past the holiday season into February-March, that's when we'll really start getting a solid read in how our thesis is playing out. as you can imagine right now with the holiday season coming up folks aren't looking at platform switching but once we get past the holiday season into february-march that's when we'll really start getting a solid read in how our thesis is playing out

Speaker 1: Got it. Got it. I think we have time for one last question. I want to kind of wrap this all up on the margin side of the equation. A lot of really interesting opportunity for Intuit on the top-line growth side of the equation. You're unlocking big new market opportunities and assisted big new market opportunities in the mid-market on the GBS side of the equation. You are adding salespeople to go after these. You're adding locations. Yet you remain confident in margin expansion and revenues outpacing the level of expense growth, despite having some really good product initiatives to invest behind. So how are you thinking about that balance? And what helps drive the additional leverage in the company? Got it. got it Got it. got it I think we have time for one last question. i think we have time for one last question I want to kind of wrap this all up on the margin side of the equation. i want to kind of wrap this all up on the margin side of the equation A lot of really interesting opportunity for Intuit on the top-line growth side of the equation. a lot of really interesting opportunity for intuit on the top-line growth side of the equation You're unlocking big new market opportunities and assisted big new market opportunities in the mid-market on the GBS side of the equation. you're unlocking big new market opportunities and assisted big new market opportunities in the mid-market on the gbs side of the equation You are adding salespeople to go after these. you are adding salespeople to go after these You're adding locations. you're adding locations Yet you remain confident in margin expansion and revenues outpacing the level of expense growth, despite having some really good product initiatives to invest behind. yet you remain confident in margin expansion and revenues outpacing the level of expense growth despite having some really good product initiatives to invest behind So how are you thinking about that balance? so how are you thinking about that balance And what helps drive the additional leverage in the company? and what helps drive the additional leverage in the company

Speaker 2: So first and foremost, we want to make sure that we are putting fuel on these growth vectors. And one thing that I do as I look at where expenses are going, that ever-increasing portion of that is going towards the three big bets: delivering Intuit experiences, delivering end-to-end money movement solution, and unlocking the opportunity in mid-market. And we are seeing over 40% of our spend go towards those big bets and expect that to scale up to 60% in the near term and to 80% over the intermediate term. And in terms of where the confidence for margin expansion comes from, you know, it starts with traditional focus on expense management, making sure dollars are going towards the things that are going to be needle movers for the business and being really disciplined about cutting areas that aren't paying off to the level that they should be. So first and foremost, we want to make sure that we are putting fuel on these growth vectors. so first and foremost we want to make sure that we are putting fuel on these growth vectors And one thing that I do as I look at where expenses are going, that ever-increasing portion of that is going towards the three big bets: delivering Intuit experiences, delivering end-to-end money movement solution, and unlocking the opportunity in mid-market. and one thing that i do as i look at where expenses are going that ever-increasing portion of that is going towards the three big bets delivering intuit experiences delivering end-to-end money movement solution and unlocking the opportunity in mid-market And we are seeing over 40% of our spend go towards those big bets and expect that to scale up to 60% in the near term and to 80% over the intermediate term. and we are seeing over 40% of our spend go towards those big bets and expect that to scale up to 60% in the near term and to 80% over the intermediate term And in terms of where the confidence for margin expansion comes from, you know, it starts with traditional focus on expense management, making sure dollars are going towards the things that are going to be needle movers for the business and being really disciplined about cutting areas that aren't paying off to the level that they should be. and in terms of where the confidence for margin expansion comes from you know it starts with traditional focus on expense management making sure dollars are going towards the things that are going to be needle movers for the business and being really disciplined about cutting areas that aren't paying off to the level that they should be It comes with operating at increased scale and just having economics that come with that scale, so for example, when my payment volume goes up 29%, I'm not increasing my risk team by 29% or my payments team, so a lot of that flows straight to my bottom line, and then using technology, whether it's AI, robotic product automation, or other technology to improve the productivity of our workforce. With AI, we're delivering about $135 million in savings in customer success organization just this fiscal year. We're unleashing the productivity of our developers north of 30%. We're using AI across our marketing function, our sales function, increasing the productivity of that sales team, so these are all areas that we're still in the early innings. It comes with operating at increased scale and just having economics that come with that scale, so for example, when my payment volume goes up 29%, I'm not increasing my risk team by 29% or my payments team, so a lot of that flows straight to my bottom line, and then using technology, whether it's AI, robotic product automation, or other technology to improve the productivity of our workforce. it comes with operating at increased scale and just having economics that come with that scale so for example when my payment volume goes up 29% i'm not increasing my risk team by 29% or my payments team so a lot of that flows straight to my bottom line and then using technology whether it's ai robotic product automation or other technology to improve the productivity of our workforce With AI, we're delivering about $135 million in savings in customer success organization just this fiscal year. with ai we're delivering about $135 million in savings in customer success organization just this fiscal year We're unleashing the productivity of our developers north of 30%. we're unleashing the productivity of our developers north of 30% We're using AI across our marketing function, our sales function, increasing the productivity of that sales team, so these are all areas that we're still in the early innings. we're using ai across our marketing function our sales function increasing the productivity of that sales team so these are all areas that we're still in the early innings I see so much more that it could play itself, including AI going from an add-on complement to the work that our teams are doing to actually replacing and taking over the full work that the teams are doing. That's giving me the confidence and the ability to continue to scale margin for years to come. I see so much more that it could play itself, including AI going from an add-on complement to the work that our teams are doing to actually replacing and taking over the full work that the teams are doing. i see so much more that it could play itself including ai going from an add-on complement to the work that our teams are doing to actually replacing and taking over the full work that the teams are doing That's giving me the confidence and the ability to continue to scale margin for years to come. that's giving me the confidence and the ability to continue to scale margin for years to come

Speaker 1: Outstanding. Well, unfortunately, that takes us to the end of our time. But thank you for sharing a very exciting story. I'm very excited about Intuit. And I'm sure everyone out here is as well. Outstanding. outstanding Well, unfortunately, that takes us to the end of our time. well unfortunately that takes us to the end of our time But thank you for sharing a very exciting story. but thank you for sharing a very exciting story I'm very excited about Intuit. i'm very excited about intuit And I'm sure everyone out here is as well. and i'm sure everyone out here is as well

Speaker 2: Thank you, Keith. Thank you, everyone, for your time. Thank you, Keith. thank you keith Thank you, everyone, for your time. thank you everyone for your time

Speaker 1: Awesome. I appreciate it. Awesome. awesome I appreciate it. i appreciate it