Intuit Q3 2022 Earnings Call Transcript

Participants

Corporate Executives

• Kim Watkins, Investor Relations
• Sasan Goodarzi, Chief Executive Officer
• Michelle Clatterbuck, Executive Vice President, Chief Financial Officer

Analysts

• Siti Panigrahi, Mizuho
• Unidentified Participant
• Keith Weiss, Morgan Stanley
• John Byun, Jefferies Financial Group Inc.
• Adam Ron, Bank of America Co.
• Kash Rangan, The Goldman Sachs Group, Inc.
• Daniel Jester, BMO Capital Markets
• Strecker Backe, Wolfe Research
• Scott Schneeberger, Oppenheimer Holdings Inc.
• Kartik Mehta, Northcoast Research
• Brad Reback, Stifel Nicolaus

Presentation

[Operator]

Good afternoon, my name is Latif and I will be your conference facilitator. At this time, I would like to welcome everyone to Intuit's Third Quarter Fiscal Year 2022 Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer period. [Operator Instructions]

With that, I'll now turn the call over to Kim Watkins, Intuit's Vice President of Investor Relations. Ms. Watkins?

[Kim Watkins, Investor Relations at Intuit]

Thanks, Latif. Good afternoon and welcome to Intuit's third quarter fiscal 2022 conference call. I'm here with Intuit's CEO Sasan Goodarzi; and Michelle Clatterbuck, our CFO.

Before we start, I'd like to remind everyone that our remarks will include forward-looking statements. There are a number of factors that could cause Intuit's results to differ materially from our expectations. You can learn more about these risks in the press release we issued earlier this afternoon, our Form 10-K for fiscal 2021 and our other SEC filings. All of those documents are available on the Investor Relations page of Intuit's website at intuit.com. We assume no obligation to update any forward-looking statements. Some of the numbers in these remarks are presented on a non-GAAP basis. We've reconciled the comparable GAAP and non-GAAP numbers in today's press release. Unless otherwise noted, all growth rates refer to the current period versus the comparable prior year period and the business metrics and associated growth rates refer to worldwide business metrics. A copy of our prepared remarks and supplemental financial information will be available on our website after this call ends.

And with that, I'll turn the call over to Sasan.

[Sasan Goodarzi, Chief Executive Officer at Intuit]

Thanks, Kim and thanks to all of you for joining us today. I'm proud of our continued momentum as we execute on our strategy to be the global AI-driven expert platform powering the prosperity of consumers and small businesses. We have a nearly $300 billion addressable market driven by tailwinds that include a shift to virtual solutions, acceleration to online and omnichannel capabilities and digital money offerings. This combined with the team's execution is contributing to the strength of our performance.

Third quarter revenue grew 35%, including 6 points from the addition of Mailchimp. It was another strong quarter for our Small Business and Self-Employed Group with revenue up 42%, 20% organically. Credit Karma posted another quarter with revenue at an all-time high, up 48% and I'm proud of how the team executed in the Consumer Group in another unusual tax season. We are confident in our business trajectory and are raising our total Intuit revenue and non-GAAP earnings per share guidance for fiscal year 2022. We expect to grow total company revenue 31% to 32%, as our platform is in demand now more than ever.

Let me now turn to tax. Our multi-year strategy is to extend our lead in the do-it-yourself category and transform the assisted category with TurboTax Live. This strategy is working. This fiscal year, we expect our share of total IRS returns to be up approximately 1 point and our share of the do-it-yourself category to increase 2 points. We're also growing average revenue per return once again. We expect customers in underpenetrated segments, including Latinx, self-employed and investors to grow double-digits in total.

Within transforming the assisted category, we continue to make progress connecting people to experts with TurboTax Live. We anticipate achieving a significant milestone with TurboTax Live revenue, reaching $1 billion in fiscal year 2022, growing approximately 30% and customers growing 20%. Note, that last year TurboTax Live customer growth significantly benefited from the introduction of the Free Basic offer. We're proud of the progress against our strategy. However, slower total IRS returns growth is resulting in expected consumer group revenue growth of 10% this fiscal year.

We now expect overall IRS returns to decline 3% through July 31 compared to IRS returns growth of 3% to 4% the last two seasons. This was driven by one-time stimulus filers that did not return the season and overall IRS extensions up significantly year-over-year with the number of TurboTax customers filing extensions nearly doubling. As a reminder, every point of IRS return growth equals about 1 point of TurboTax revenue growth. We now expect the do-it-yourself category share of total IRS returns to be flat this year, below our expectations after growing an average of approximately 1 point per year over the last two years.

Our hypothesis is that the do-it-yourself category performance was weaker than we expected due to the one-time stimulus filers, approximately 30% of whom were paid customers for us last season. While the last three years were anything but normal, over the period, IRS returns grew on average 1 percentage per year and the do-it-yourself category gained an average of just over 0.5 point of share per year, consistent with long-term trends. Looking ahead, we expect more normal total IRS returns growth.

More broadly, our AI-driven expert platform strategy is accelerating innovation and our five Big Bets are solving the largest problems our customers face. We continue to deliver strong proof points that demonstrate the success and are well positioned for durable growth in the future. As a reminder, these Big Bets are revolutionize speed to benefit, continue -- connect people to experts, unlock smart money decisions, be the center of small business growth and disrupt the small business mid-market. Today, I'd like to highlight examples of our recent progress across three of these Big Bets.

Our third Big Bet is to unlock smart money decisions. We continue to see strong momentum with Credit Karma, a data platform with powerful network effects solving a two-sided problem. Our vision is to unlock smart money decisions by creating an autonomous financial platform that helps consumers find the right financial products, put more money in their pockets and connect them to insights and advice.

In Credit Karma, we continue to innovate across all verticals. Our proprietary Lightbox technology allows us to better personalize and connect numbers for the products that are right for them, providing more certainty to members and partners on the platform. We continue to see strength in credit cards and personal loans with combined Lightbox penetration remaining very high. Lightbox approximately doubles the average approval rate of members who apply for credit cards on Credit Karma versus outside of Credit Karma, making it a competitive differentiator for both our members and partners.

We continue to make progress combining our capabilities to fuel the success of both TurboTax and Credit Karma. We integrated Credit Karma Money into TurboTax filing experience, more than tripling the number of TurboTax online customers who deposited their refund into their Credit Karma Money account this year. This gave them the ability to receive their refund up to five days earlier with direct deposits. These TurboTax customers drive Credit Karma member growth and like other Credit Karma members get access to personalized products across the platform, which accelerates engagement over time.

Our fourth Big Bet is to become the center of small business growth by helping our customers get customers, get paid fast, manage capital, pay employees with confidence and grow in an omnichannel world. 60% of small businesses struggle with cash flow and we continue to innovate to help customers overcome this challenge. In payments, we offer a single place where small businesses can get paid, pay others, manage money and access capital.

We are seeing more customers accessing loans through QuickBooks Capital with loan volume at record level, more than tripling year-over-year in April. We have increased discoverability and expanded eligibility in the product. This is driven by our rich data and proprietary risk models, which allows us to use our customers' data on their behalf and with their permission to offer access to loans. In addition to cash flow, getting an engaging customers remains a significant pain point for small and mid-market businesses. With Mailchimp, we are well on our way to becoming the source of truth for our customers to help them grow and run their business.

We have three acceleration priorities with Mailchimp. First, delivering on our vision of an end-to-end customer growth platform. Second, disrupting the mid-market by developing a full marketing automation, CRM and e-commerce suites. And third, accelerating global growth with a holistic go-to-market approach. We continue moving with speed as we focus on product innovation, marketing and improving conversion.

First, we launched a customers and leads tab within QuickBooks Online, which allows new and existing customers to send revenue and customer data from QBO to Mailchimp in real time where small businesses can segment customers and automate marketing campaigns based on QuickBooks data. We're also saving customers time by bringing in their contact list into that Mailchimp from other partners and platforms. Second, we continue to invest in marketing. We are seeing early signs of the recent investments in paid media are driving growth in customer sign-ups across large markets like the US. We expect this to take time for it to translate into financial results, but we're excited about the potential.

And third, we're focused on opportunities to improve conversion as we look at the top of the funnel traffic to how we deliver benefits in the product for our customers. This includes highlighting product benefits as soon as customers enter the product, improving the checkout page experience and streamlining in-product navigation. Our fifth Big Bet is to disrupt the small business mid-market with QuickBooks Online Advanced. During the quarter, we launched in Canada, the first market outside of the US, expanding the geographic reach of this offering.

Accelerating innovation and executing our strategy starts with our employees. I'm proud to share that we were Fortune's 100 Best Companies to Work For list for the 21st year in a row. This year proudly ranking number 11. We remain focused on creating an environment where our employees can bring their whole selves to work and do the best work of their lives, which is reflected in our employee retention rate that is above our peers.

Wrapping up, we feel confident in our long-term business strategy. Our strong business fundamentals, including our balance sheet, our speed of innovation and the demand for our platform continues to put Intuit in a position of strength. In the current macro environment, the benefits of our platform are more important than ever. We're proud to be the platform of choice for over 100 million customers around the world who rely on Intuit to prosper.

Now, let me hand it over to Michelle.

[Michelle Clatterbuck, Executive Vice President, Chief Financial Officer at Intuit]

Thanks, Sasan. For the third quarter of fiscal 2022, we delivered revenue of $5.6 billion, up 35%, including 6 points from the addition of Mailchimp. GAAP operating income of $2.4 billion versus $1.9 million last year. Non-GAAP operating income of $2.9 billion versus $2.2 billion last year. GAAP diluted earnings per share of $6.28 versus $5.30 a year ago. And non-GAAP diluted earnings per share of $7.65 versus $6.07 last year.

On May 4, we entered into a settlement agreement with the state attorneys general regarding our advertising practices related to free tax preparation. This resulted in a $141 million one-time charge in our fiscal third quarter. Under the terms of the settlement we admitted no wrongdoing. We are pleased to put this issue behind us, so we can continue to focus on delivering innovative solutions for our customers. Excluding the settlement charge, our fiscal third quarter GAAP and non-GAAP operating margin would have been 250 basis points higher and GAAP and non-GAAP earnings per share would have been $0.37 and $0.38 higher, respectively.

Turning to the business segments. Consumer Group revenue was $3.2 billion, up 32%, reflecting the earlier IRS tax filing deadline this year. I'm proud of our execution this season, as we expect to gain share and grow our average revenue per return. There are four primary drivers of our consumer business. This data reflects our expectations through July 31, 2022 versus the prior year through July 31, 2021. The first is the total number of returns filed with the IRS. We now expect total returns to decline 3% this year, below our original expectations. Every point of IRS returns growth equals about 1 point of TurboTax revenue growth.

The second is the percentage of those returns filed using do-it-yourself software. We expect the DIY category share of total IRS returns to be flat by the end of the year, also below our expectations. The third driver is our share. We expect our share of total IRS returns to expand approximately 1 point this year and our share of the DIY category to be up 2 points, excluding users of the TurboTax Free File offering in prior year periods. The fourth is average revenue per return, which we expect to increase this year driven by a mix shift to TurboTax Live and our Premier offering used by investors as well as fewer free customers.

As a result of the weaker IRS returns, we now expect total customer growth of 1%, including TurboTax online paying customer growth of 8% this year. We expect the base of customers paying us nothing in our commercial free offering to decline 11% this year to just over 13 million from over 14 million last year. This was driven by one-time stimulus filers that did not return this season. Approximately 30% of whom were paying customers. We now expect Consumer Group revenue growth of approximately 10% in fiscal 2022 versus our prior guidance of 10% to 11%, reflecting the decline of total IRS returns I mentioned earlier. We continue to expect Consumer Group revenue growth of 8% to 12% long-term.

Turning to the ProConnect Group, revenue grew 10% in Q3, reflecting a shift in the timing of the IRS tax filing window year-over-year. For the full year, we now expect ProConnect Group revenue growth of 4% to 5%. In the Small Business and Self-Employed Group, revenue grew 42% during the quarter or 20% on an organic basis, excluding $257 million in revenue from the Mailchimp. Online Ecosystem revenue grew 67% or 31%, excluding Mailchimp. With the aim of being the source of truth for Small Businesses, our strategic focus within the Small Business and Self-Employed Group is three-fold; grow the core, connect the ecosystem and expand globally.

First, we continue to focus on growing the core. QuickBooks Online Accounting revenue grew 32% in fiscal Q3, driven mainly by higher effective prices, customer growth and mix shift. Second, we continue to focus on connecting the ecosystem. Online Services revenue, which includes Mailchimp, payroll, payments, capital and time tracking, grew 121% in fiscal Q3. Excluding Mailchimp, Online Services revenue grew 28%. Mailchimp revenue recorded in Online Services was $257 million in the quarter and this was in line with our expectations. Within payroll, revenue growth in the quarter reflects growth in payroll customers and a mix shift to our full-service offering. Within payments, revenue growth reflects an increase in charge volume per customer and ongoing customer growth.

Third, we continue to make progress expanding globally. Total international Online Ecosystem revenue grew 221% in fiscal Q3 on a constant currency basis and 29% on an organic basis, excluding Mailchimp. We believe the best measure of the health and success of our strategy is Online Ecosystem revenue growth, which we expect to grow better than 30% organically over time. This is driven by 10% to 20% expected growth in both customers and ARPC. Desktop Ecosystem revenue grew 3% in the third quarter. QuickBooks Desktop Enterprise revenue grew mid-teens, driven by strong customer growth and price increases. Longer term, we don't expect the desktop business to be a growth driver for the Small Business and Self-Employed Group.

Moving on to Credit Karma, revenue grew 48% to $468 million in Q3, another record revenue quarter, driven primarily by growth in average revenue per monthly active user. On a product basis, revenue growth was driven primarily by personal loans and credit cards and to a lesser extent, auto loans. We are developing the emerging verticals by focusing on innovation with Credit Karma Money, which we believe is key to growing the frequency of visits over time. As Sasan shared earlier, we saw a more than tripling in the number of TurboTax online customers who deposit their refund into their Credit Karma Money account this year. We remain excited about the opportunities ahead.

Turning to our financial principles, we remain committed to growing organic revenue double digits and growing operating income dollars faster than revenue. As we shared before, as we lean into our platform strategy, we see the opportunity for margin expansion over time. We take a disciplined approach to capital management, investing the cash we generate in opportunities that yield an expected return on investment greater than 15%. We continue to reallocate resources to top priorities with an emphasis of being an AI-driven expert platform. These principles guide our decisions and remain our long-term commitment.

Our first priority for the cash we generate is investing in the business to drive customer and revenue growth. We consider acquisitions to accelerate our growth and fill out our product roadmap. We return excess cash that we can't invest profitably in the business to shareholders via both share repurchases and dividends. We finished the quarter with approximately $3.9 billion in cash and investments on our balance sheet. We repurchased $489 million of stock during the third quarter. Depending on market conditions and other factors, our aim is to be in the market each quarter. The Board approved a quarterly dividend of $0.68 per share, payable July 18, 2022. This represents a 15% increase versus last year.

Moving on to guidance, we are raising our full year fiscal 2022 revenue and non-GAAP earnings per share guidance to reflect the momentum we've seen throughout the year in the Small Business and Self-Employed Group and Credit Karma. Our updated fiscal 2022 guidance includes revenue of $12.633 billion to to $12.674 billion, growth of 31% to 32%, including Mailchimp as of November 1 and a full year of Credit Karma, up from prior guidance of 26% to 28% growth. Excluding $765 million to $770 million in Mailchimp revenue, growth of 23% to 24%, up from prior guidance of 18% to 20% growth.

GAAP earnings per share of $6.95 to $7.01, down from prior guidance of $7.00 to $7.17, excuse me, $7.16. We now expect a GAAP tax rate of approximately 20% this year, up from 18% previously. Non-GAAP earnings per share of $11.68 to $11.74, up from prior guidance of $11.48 to $11.64. Our fiscal 2022 guidance includes the impact of the $141 million one-time charge related to the state attorneys general settlement. Excluding this charge, our expected GAAP and non-GAAP operating margin would be approximately 110 basis points higher in fiscal 2022, above our prior guidance. Expected fiscal 2022 GAAP and non-GAAP earnings per share would be approximately $0.37 and $0.38 higher, respectively.

Our guidance for the fourth quarter of fiscal 2022 includes a revenue decline of 8% to 9%, reflecting the earlier tax filing deadline this year versus last year. GAAP loss per share of $0.53 to $0.47 and non-GAAP earnings per share of $0.94 to $1.00. You can find our full Q4 and fiscal 2022 guidance details in our press release and on our fact sheet.

With that, I'll turn it back over to Sasan.

[Sasan Goodarzi, Chief Executive Officer at Intuit]

Great, thank you, Michelle. And before closing, I wanted to mention the leadership changes in our Consumer Group that we shared in our earnings release today. Effective May 31, Greg Johnson, General Manager of the Consumer Group will step down as the leader of Intuit's consumer business to become CEO of McAfee. Varun Krishna, Senior Vice President and General Manager of TurboTax growth products will succeed Greg as the General Manager of the Consumer Group. Greg has done a tremendous job driving growth for our consumer business and I couldn't be happier for this next chapter for him.

Intuit is well-known for developing world-class leaders and Greg is no exception. McAfee is lucky to have him. At the same time, I couldn't be more excited to welcome Varun as the consumer group's next General Manager. With over seven years of experience, leading commercial and product innovation for TurboTax, Varun is perfectly suited for leading Consumer Group's next phase of growth. We are seeing continued momentum across the entire company given our strategy of being an AI-driven expert platform that is powering prosperity for consumers and small businesses. I'm proud of the team and how we've delivered for our customers so far this year.

And with that let's now open up to your questions.

Questions and Answers

[Operator]

Thank you. [Operator Instructions] Our first question comes from the line of Siti Panigrahi of Mizuho. Your line is open.

[Siti Panigrahi, Analyst at Mizuho]

Thank you. Thanks for taking my question. It's very impressive to see strong momentum in Credit Karma as well as small business and how you raised guidance. So, Sasan, I'm wondering given this geopolitical uncertainty, even some concern about any macro slowdown, how is Credit Karma positioned in terms of growth and also in your Small Business segment?

[Sasan Goodarzi, Chief Executive Officer at Intuit]

Yeah, sure. Thank you for the question. I'll break down your question sort of in three parts given that we are a platform company with sort of a great profile of businesses and I'll start with tax. I know that was not part of your question, but it's important to start there, which is tax is sort of very resilient in any type of an environment and it's more than 30% of the company's revenue when you look at both TurboTax and our pro tax business. In Small Business, there is a flight to digitization to manage your cash flow.

And just I would remind us that we are now [Indecipherable] I know a growth and money center platform for small businesses. And so there is a, a slice to be able to manage your cash flow on our platform and the two stats that's I would use that are very recent and sort of the here and now. One, our loan business had the record high volume in April. It was 3 times higher than it's been year-over-year and our charge volume continues to be strong as of last month and even in this last week, our charge volume has been growing north of 30% and I use those couple of stats just more as proof point in terms of the importance of our platform in these unique times.

And when it comes to Credit Karma, first of all, on the demand side, I would say that when you get into tougher recessionary times, the demand for the products on our Credit Karma platform actually grows. Now, it's the discussion is about the supply side. And in fact with our partners, there is a flight to quality, this is where the power of the data that we have on our customers' behalf on Lightbox and I've been talking about over the last couple of years come into play because with our partners and the flight to quality, putting their credit card models on our platform, they're actually able to really get the kind of quality customers that they need. So, it's just sort of a perfect match between members and partners, which is by the way, why we saw the strength this past quarter, a 48% growth and why the platform continues to be very resilient in these times. So those would be, I would say the headlines I would share with you about our platform being in need at probably some very unique times who are our customers need us most.

[Siti Panigrahi, Analyst at Mizuho]

Sasan, thanks for covering the tax. But just a quick follow-up on TurboTax Live full service. This is the second year, what sort of trend you have seen? Do you see more share gain from the assisted category or your own customer now moving more into full service kind of product?

[Sasan Goodarzi, Chief Executive Officer at Intuit]

Yeah, great question. I would just start with, there is 86 million customers that are in the assisted category and that the TAM is over $20 billion and we hit a major milestone this year of delivering $1 billion of revenue with TurboTax Live growing at 30%. So, we are in the very early stages of what's possible in growth and penetration in the assisted category and that is really the long-term really bright spot and future growth for TurboTax, which we are very excited about.

[Siti Panigrahi, Analyst at Mizuho]

Thank you.

[Sasan Goodarzi, Chief Executive Officer at Intuit]

You're very welcome.

[Operator]

Thank you. Our next question comes from Kirk Materne of Evercore ISI. Your line is open.

[Unidentified Participant, at Intuit]

Hi, this is [Indecipherable] calling in for Kirk. Thanks for taking the question and congratulations on a great quarter. Maybe one for Michelle. Given some of the uncertainty in the macroeconomic environment, is there anything that you changed in terms of the forecasting process just to account for some greater uncertainty moving forward? Thank you.

[Michelle Clatterbuck, Executive Vice President, Chief Financial Officer at Intuit]

Hi, thanks for the question. Yes, you know, as we see the macro environment and unfolding one of the good things that Sasan has shared is, we really don't see a lot -- have not seen a lot of impact to our business. It is one of the things that we are continuing to look for, but given the way our business works, the platform that we have and really the need that small businesses and consumers have in times like these even more for our products and our platform, we don't anticipate seeing an impact. And so we're always looking to make sure to see what's happening. But we haven't really changed anything with our forecast at this point in time and any -- as you can see with our guidance that we've given.

[Sasan Goodarzi, Chief Executive Officer at Intuit]

The only thing I would add is majority of our business, if not most of it is highly predictable. And for the most part in some areas it's subscription, pretty much most of small business, which includes Mailchimp is subscription. So, the predictability is quite high. And we are very sort of data driven in terms of what we look at daily to see our performance and as Michelle said, that combined with the indicators that we see, the demand remains very strong on our platform.

[Unidentified Participant, at Intuit]

Got it. Thank you, both.

[Sasan Goodarzi, Chief Executive Officer at Intuit]

Very welcome.

[Operator]

Thank you. Our next question comes from Keith Weiss of Morgan Stanley. Your line is open.

[Keith Weiss, Analyst at Morgan Stanley]

Excellent. Thank you guys for taking the question. And really nice quarter. Maybe start out with a question for Michelle. Just a point of clarification. So, am I reading this right that we should add that or not add, but like the $0.38 is not included in your guide for the full year? So, if it wasn't for that settlement, the EPS guide would be like $12.06 to $12.12, is that right way to read it?

[Michelle Clatterbuck, Executive Vice President, Chief Financial Officer at Intuit]

That's exactly right. Keith, because of the nature of the charge, the one-time is not an impact to the underlying structural part of our business. We wanted to make sure that you can see really what is the business driving. And so, yes, it actually would have been higher. It would have been the $0.37 higher on GAAP and $0.38 higher on non-GAAP for EPS for the full year.

[Keith Weiss, Analyst at Morgan Stanley]

Got it, got it. So, that wasn't my question. It was just a clarification. So, the question is, pace of operating margin expansion on a go-forward basis, because it does seem like you're outperforming your original expectation for FY '22. You talked about previously an ability to sort of have a consistent cadence of operating margin expansion on a go-forward basis. I think you talked about maybe like 100 basis points a year going forward. Does that change at all given sort of the outperformance you saw in FY '22 or do you think that's still achievable on a go-forward basis?

[Michelle Clatterbuck, Executive Vice President, Chief Financial Officer at Intuit]

But you know we have our financial principles first of all. So, our financial principles to grow revenue double digits and grow operating income faster than revenue. We haven't set out any target for what that margin expansion might look like over time, but we do see that it is possible because of the benefits of being, having the platform that we do and so besides being able to innovate more quickly and deliver for our customers, we do continue to see those opportunities as you're seeing this year that we can really leverage key services and capabilities across our business, whether that be in technology or customer success or sales and marketing, we do continue to see an opportunity there although, we have not given any type of specific range what that expansion might look like.

[Keith Weiss, Analyst at Morgan Stanley]

Got it, got it. And then for Sasan, hoping to get an update on Mailchimp. It's -- you saw a nice sequential improvement this quarter and I think that's going to surprise a lot of investors. It's definitely an area where investors had been most degree of caution. And I think some of it comes from some of the data points that we look at. We look at like Google trends and it doesn't seem to be trending higher. I know a lot of my clients look at credit card panel data and they said that they'd been pretty weak, but the performance has been I think a little bit better than expectation. Can you give us an update on how Mailchimp is doing and how far into that integration we are?

[Sasan Goodarzi, Chief Executive Officer at Intuit]

Yeah, I'll tell you, Keith, we are probably more excited today as we sit here than we were even when we made these announcements because now we're into the work and I would just say that we are delivering against our expectations and our belief and confidence is that is the best is yet to come and very specifically, we're focused on creating a growth platform. So, in one place, a customer can grow and run their business. And we now have proof points of the things that we're starting to deliver like the customers and leads that's in QuickBooks where now we are transferring all your customer and revenue data into Mailchimp.

The second thing is really looking back the investment in marketing and knowing where to invest has been underwhelming and that excites us as we look ahead. We've got some of our best marketing leadership teams now in Mailchimp and the investments that we are making in terms of one, go-to-market strategy, pricing principles and how to invest is we're starting to see some green shoots and with the investments that we're making and we're quite good at these sorts of things. We foresee the financial results will be forthcoming.

And then last but not least, both going up market, the mid-market and international. In fact, we will talk more about this at Investor Day, but we have refreshed our international strategy and a big part of that will actually include Mailchimp because of the fact that half of their business came from outside of the US, really with little effort. So, that was a long way of saying, we're quite excited about our momentum and we're very excited about the trajectory of the business and sort of the best in terms of growth is yet to come. And I don't think you're going to be able to pick up the performance of Mailchimp through Google trends.

[Keith Weiss, Analyst at Morgan Stanley]

Got it. Thank you very much, guys.

[Sasan Goodarzi, Chief Executive Officer at Intuit]

Yeah. Very welcome, Keith.

[Operator]

Thank you. Our next question comes from Brent Thill of Jefferies. Please go ahead.

[John Byun, Analyst at Jefferies Financial Group]

Hi, thank you. This is John Byun for Brent Thill. Just had actually another macro question. Wonder if you could remind us how you performed in past recessions and how it might be different for you this time? Obviously, you have Mailchimp and you have Credit Karma but on the plus or minus side. Then I have a follow up.

[Sasan Goodarzi, Chief Executive Officer at Intuit]

Yeah, sure. Thanks for the question. First of all, the last recession that we look back on, we actually grew 4% and this is I think this was in 2008 and we grew 4% where most of our peers actually declined. And so we perform well in recessionary times. I would also then go on to say we are a totally different company today than when we were in 2008 in terms of the strength of our platform today versus in 2008. One, we now have a platform and by definition, we're in the cloud whereas back then, we were primarily desktop.

We're in the cloud where the tailwinds around digitization, a shift to a virtual world, the shift to online digitization to drive managing cash flow is actually essential for customers. And then you combine that with what I mentioned earlier, with our Credit Karma platform where demand is actually higher in recessionary time and our strength of our data and Lightbox capabilities makes it a great flight to quality for our partners, which is the current strength that we are -- that we are seeing. So, we'd actually expect to perform better if it was exactly like-for-like compared to 2008. But nevertheless, those were the stats of the past recession and how we performed and we're in a much stronger position today.

[John Byun, Analyst at Jefferies Financial Group]

It's very helpful, thank you. And then just another quick one, on Mailchimp, just wanted to see if you could update us on the progress in terms of where the growth is coming from? Is it still mainly from e-mail marketing or are you getting more traction with the broader CRM suite and the website builders in e-commerce?

[Sasan Goodarzi, Chief Executive Officer at Intuit]

Yeah, I would say the majority of really the growth is still coming from just the viral word of mouth nature of the platform and we are building out the capabilities of the platform. One of the biggest things that we've learned now having the business as part of the company is how much capabilities the platform has that customers don't know about and how many customers don't even know about Mailchimp because we've really never invested in marketing. And so a lot of what we're seeing is sort of just continued word of mouth because of the benefits that it delivers with our investments in the products that I mentioned a moment ago, the investments that we are making strategically and marketing, and that will accelerate over time and then doing so going upmarket and international, we expect that will be accretive to growth as we head into the future, but most of it right now is just I would say word of mouth.

[John Byun, Analyst at Jefferies Financial Group]

Okay. Thanks very much.

[Sasan Goodarzi, Chief Executive Officer at Intuit]

You're very welcome.

[Operator]

Our next question comes from Brad Sills of Bank of America. Your line is open.

[Adam Ron, Analyst at Bank of America]

Hey, thank you. This is Adam on for Brad, I guess my first question is, can you compare and contrast any differences in demand you might be seeing between QuickBooks and Mailchimp if at all? And then in the enterprise category, you kind of see a division of spend between the two, but I was kind of wondering if that's kind of different with given you guys kind of focus on the SMB?

[Sasan Goodarzi, Chief Executive Officer at Intuit]

Sure. First and foremost, I would start with these are both subscription-based businesses and together they create magic apart. One helps you manage your cash flow which is QuickBooks, the other one helps you actually grow your business. And so I would say the demand and the strength of the demand is fairly consistent for those customers, whether they're new or customers that have been in business for a while that realize that they have to find a way to market to their existing customers to be able to grow with them and grow their wallet share and also find ways to market their business on different channels, whether it's their website, whether it's on Instagram, Facebook, Amazon, Etsy.

And so the demand is consistent. It depends on what you were trying to do and all businesses are trying to both grow their business and be able to run their business and manage the cash flow. And what they don't have is the platform in one place nor do they have the data and that's why bringing Mailchimp and QuickBooks together will over time actually drive higher retention, higher expansion of services and wallet share and also higher penetration because what we can do together, is hard to do apart.

[Adam Ron, Analyst at Bank of America]

Got it. Thank you. And then turning to TurboTax real quick, when I think of some of my favorite differentiators for the product, I think of just auto importing the investment or TT Live and full service. But it seems like a lot of the R&D work for those are done. So, I guess my question is where -- where are like the incremental investments going in terms of R&D for TurboTax now? Thank you.

[Sasan Goodarzi, Chief Executive Officer at Intuit]

Sure. First of all, there is no destination for the investments. We are continuing to invest in machine learning and knowledge engineering to not only make the experts that are on our platform smarter, so that we can lead how we answer questions through technology and not just through human labor. But two, in terms of how we do the matching and how we ensure that our -- really our technology, the bots are engaging in answering the questions. So, we're getting better at this every single day and we're going to continue to invest in that area.

I think the other thing I would say is around the money. The biggest thing that we learned this year where we're excited about next year, it's actually about everything in the assisted segment is about speed to taxes done and speed to my money. And so the integration of Credit Karma into TurboTax where you can now get early access to your refund that's another area of investment for us because there's so much more we can do in the experience. So, it's both getting you to a place where taxes are done and experts are smarter in terms of how they help you and also faster access to money and then being able to do that across very specific segments like investors, self-employed, Latinx and over time, the creator economy. So, our investments will continue in those areas. And remember, we invested the platform level and at the company level. These are not just investments within TurboTax, because they then also benefit us in QuickBooks Live and other areas.

[Adam Ron, Analyst at Bank of America]

Awesome. That's awesome color. Thank you very much.

[Sasan Goodarzi, Chief Executive Officer at Intuit]

Yeah. You're very welcome.

[Operator]

Our next question comes from Kash Rangan of Goldman Sachs. Your question please.

[Kash Rangan, Analyst at The Goldman Sachs Group]

Thank you very much. Congratulations Sasan and team, spectacular results. Sasan I think some of us, including you will fondly remember that back in the 2008-2009 recession, Intuit was probably the only company, one of the few companies that actually grew its revenues right through the recession. Of course, we're not calling for anything specifically. But as someone running the most admired companies with significant exposure to the SMB space, I'm curious how Intuit's products are positioned in a way that it could help customers the most to be able to weather through this, as we all understand combination, inflation, rates et cetera? And also if you could, I think, I think that's quite a question. So, I'll just pause with that and hear your thoughts. Thank you once again and congratulations.

[Sasan Goodarzi, Chief Executive Officer at Intuit]

Yeah. Thank you, Kash. And thank you for the question. I'll use sort of tangible here and now answers, so it doesn't seem overly generic. I would just start with saying that we are most important in tougher times than just in good times and I'll start with small business. There is a accelerated flight to digitalization to manage your cash flow as a small business in these tougher times and we're seeing that now. And the example, I think I used earlier but it's worth bringing up again is in the month of April, our volume of QuickBooks Capital loans was at an all-time high and 3 times higher than the same time last year where times were much much a better compared to what environment all of us see today.

And the other is our payments volume just in the last month, in the last week, we are growing at north of 30%. This is our our payments volume. So, I use those as tangible examples just to state that we have truly become a growth platform and a money center for small businesses and in times like this, we are indeed more than ever because our capabilities are so different than the last time we were in a recession. We have all the capabilities with Mailchimp and QuickBooks to grow your business and help you with your cash flow.

And I'll just maybe pause there with small business and I'll remind us that tax, both our pro tax and TurboTax business is more than 30% of the company and is resilient in very tough times because people have to do their taxes. And then last but not least is demand is higher in recessionary times on the Credit Karma platform and there's actually a flight to quality and based on our data and Lightbox capability that's proprietary more and more partners are wanting to be on Lightbox because they can actually control the quality of their offers and it makes our platform even more demand, which is what you saw in the last quarter. And so I would foresee that playing forward, which I think was the nature of your question. We are the best positioned to serve consumers and small businesses in tough times and good times.

[Kash Rangan, Analyst at The Goldman Sachs Group]

Got it. And just to clarify, small business formation that doesn't affect Intuit. So you, they're probably lag before you get to the point where they could afford to buy Intuit products. So, should we be concerned? How concerned should be rather that small business creation might come to a standstill during the recession? How that might affect Intuit? That's it from me. Thank you.

[Sasan Goodarzi, Chief Executive Officer at Intuit]

Yeah. I wouldn't be concerned at all. If you look at our history, when the formations were high, when the formations were low or negative, it really, that's not the driver of the long-term or short-term health of the business. And so it is not something we worry about, it's actually not something we track. It's not something we talk about a lot and so you all start asking questions. Got it. So, I would just say that it is not an area of concern for us. And thanks for the question, Kash.

[Operator]

Thank you. Our next question comes from Daniel Jester of BMO Capital Markets. Your line is open.

[Daniel Jester, Analyst at BMO Capital Markets]

Hey, great. Good afternoon, thanks for taking my question. On TurboTax Live, just can you help us understand how much of the growth this year was from DIY customers transitioning to TurboTax Live versus how many were kind of net new to the platform this year?

[Sasan Goodarzi, Chief Executive Officer at Intuit]

Yeah. Thank you for the question. We don't break out the specifics, but I will take you back to why we love the TurboTax Live platform. One, there is more than 10 million people in the assisted segment that actually tread [Phonetic] and go to another person to help them with assistance. Within -- and these are directional numbers. Within TurboTax there is probably more than 10 million people that login but never actually finish their taxes. And then there is switching that happens back and forth between doing-it-yourself and then getting assistance.

The reason I bring up those three figures, is there's actually a lot of sort of movement in the tens of millions in each category and across the category between do-it-yourself and assistance and it's all driven by a lack of confidence. Can I do this myself? Did I do it right? And so when we look at the TurboTax Live platform and in fact I would say TurboTax as a whole, that's why we are now a platform where you can do-it-yourself, we can do it with you or we can do it for you across the platform. So, our growth in TurboTax Live comes from all those three areas. There are those that switch from assisted, there are those that would have left DIY that now stay with us and vice versa. It helps us with funnel metrics. So, that is the driver of where we are in TurboTax Live. That has been the driver looking backwards and it will continue to be the driver looking ahead.

[Daniel Jester, Analyst at BMO Capital Markets]

Great. That's really helpful context. Thank you. And then just to stick with tax, the comment you made about you had 3 times the number of TurboTax users who deposit their refund in a Credit Karma account. I wonder how much of a leading indicator actually is that? Do you track your balances? And is there any color you can share about what that could mean in the future? Thanks.

[Sasan Goodarzi, Chief Executive Officer at Intuit]

Sure. First of all, we're really focused on the money benefit for our customers and for those that live paycheck to paycheck to get five days early access to their refund is really meaningful. So, I'm super proud of our team for what they're doing here and because it really changes lives. With that said, we believe our hypothesis is one, over time, this will actually help with TurboTax retention. These customers become new Credit Karma members. And then as you know, Credit Karma -- on the Credit Karma platform, we're really good at leveraging what we know about you with your permission to then really match you the financial products that are right for you and find ways to save money and get out of debt.

So, it's new customers on a platform that already has over 120 million members that over time as we engage them, we'll be able to monetize. We do watch their behaviors. Do they keep the money on Credit Karma Money, do they drain it, what we can help them with in terms of things they can do with that money to be able to build their credit. So, it's really, it's truly feeds into the network effect of delivering benefits and the customers coming back for more benefits.

[Daniel Jester, Analyst at BMO Capital Markets]

Great. Thank you very much.

[Sasan Goodarzi, Chief Executive Officer at Intuit]

You're very welcome.

[Operator]

Thank you. Our next question comes from Alex Zukin of Wolfe Research. Your line is open.

[Strecker Backe, Analyst at Wolfe Research]

Thank you. This is Strecker Backe on for Alex. So, just with the success that you and everyone has been seeing with Credit Karma and Mailchimp, has it changed your view on doing additional M&A over the next 12 to 18 months and or even making you consider more of these larger transformational deals? So, can you just give us an update on how you're thinking about M&A right now? And would you say that maybe you're resource-wise you're are very focused on integrating these companies still or you have some room to take on additional deals, if it's the right deal? Thank you.

[Sasan Goodarzi, Chief Executive Officer at Intuit]

Yeah, thanks for the question. First, I'll start by saying our principles around acquisitions have not changed. For us, it is all about time-to-market and having a platform that can fundamentally power their prosperity of consumers and small businesses that we serve. And secondarily, we expect excellence from ourselves and our teams and we expect these acquisitions to be building the kind of momentum that we are building and we are -- we have a set of mechanisms within our Intuit operating system where we monitor very closely our progress against the deliverables and I mean the product and marketing deliverables and the talent on the team and their engagement to really ensure that things are, are on track.

And really everything with both of these acquisitions is about acceleration. We only integrate as long as it accelerates and so we have a very, I would say good playbook in terms of how to make acquisitions and in both cases, when you look at Credit Karma and Mailchimp, we bought the capabilities and the incredible talent, because they do things that we're not great at. And there are things we do that they're not great at and together as a family, we can create magic. So with all of that said, it doesn't accelerate or decelerate what we are looking at from a time-to-market perspective. They are both on track in terms of our expectations and we are very discrete in terms of how we allocate mindshare and resources to both of these assets and frankly, the biggest hindrance for future acquisitions is how good their management team is, it is not our mindshare or our resources. So, that's the way we think about it.

[Strecker Backe, Analyst at Wolfe Research]

Thank you.

[Sasan Goodarzi, Chief Executive Officer at Intuit]

You're very welcome.

[Operator]

Our next question comes from Brad Zelnick of Deutsche Bank. Please go ahead.

[Unidentified Participant, at Intuit]

Hey, thanks for taking my question. This is Bob on for Brad and congrats on strong tax year despite the IRS headwinds. Just sticking with tax quickly, now that you've had a second year of more basic live SKUs under your belt, how should we think about the rate and pace of customers shifting from maybe a more basic SKU to Deluxe or Premier and how that compares to typical trajectory that you might see on the traditional TurboTax Online side of things?

[Sasan Goodarzi, Chief Executive Officer at Intuit]

Yeah, it's a really good question. First of all I would tell you having sort of experimented with our TurboTax Live Basic offer, is a good experiment and it worked. The biggest thing that I would tell you that we learn in this particularly this last year is what really matters is speed to your taxes done with an expert and speed the money. And that is an area where we are doubling down going into next year, because the majority of these customers, they want their taxes done right by an expert or if you do it for them and they want access their money as soon as possible, both of which we can deliver on. And so really in that context, folks that use an assisted method generally have a more complex situation and we would expect over time, the higher SKUs that we have to play a bigger role when it comes to TurboTax Live.

[Unidentified Participant, at Intuit]

That's helpful there. And Sasan, just to the earlier point you made earlier on the call just on international. Have you seen any change in terms of trends and new customer growth or even top of funnel with either QuickBooks and Mailchimp when you look internationally versus maybe in the US?

[Sasan Goodarzi, Chief Executive Officer at Intuit]

Yeah. What is consistent is what I've shared before, which is I would say, US and Canada and I'll just use COVID as an example, coming out of, we're not out of COVID, but coming out of sort of the world shutting down, bounce back much faster than than the other countries that we're in. In the UK, in Australia and France, there has been so many sort of start, stop, start, stop that it's impacted the sort of building momentum in that country. And I don't mean us, I just mean how consumers and small businesses are thinking about managing their financial life. So, they are starting to bounce back, but they for sure are tracking behind the US and Canada. And again, I'll say that what really excites us looking ahead is the possibilities to help customers grow their customers in small business with Mailchimp, that'll be a bigger part of our future, as we roll out our strategy and game plan and we believe that that will be over the long-term accretive to our growth.

[Unidentified Participant, at Intuit]

That's helpful. Thanks for taking our questions.

[Sasan Goodarzi, Chief Executive Officer at Intuit]

Yeah. Very well. Thank you very much.

[Operator]

Our next question comes from Scott Schneeberger of Oppenheimer. Please go ahead.

[Scott Schneeberger, Analyst at Oppenheimer]

Great. Thanks very much and congratulations, Sasan, I want to dig into this is kind of an overriding question on the cadence of the tax season and want to dig into the extension. You mentioned that the IRS has elevated extension this year and you do as well. Could you speak a little bit more to that and address might there be any variability, good or bad relative to what you're expecting for the volume for the full year just on where your fiscal year ends and potential extension deadline? Thanks.

[Sasan Goodarzi, Chief Executive Officer at Intuit]

Yeah, sure. Scott, well, first of all, I'll start with the headline, which is there could be, but now let me give you more specifics of the guidance and what we're talking to you about is for our fiscal year, which is through the end of July. And I'll start at the top, the IRS returns through July, we are observing that it will be down 3 points and it's driven by stimulus filers that didn't come back. About 30% of them were actually paying customers and IRS extensions being up and in our base, they are nearly doubled.

And so we've made some assumptions in terms of what will happen through, through July, and of course we'll talk to you all more as we talk about our guidance for next fiscal year because we've not made those estimates and we won't communicate it today because our focus was what we communicate to you through July, but certainly the extension, most of those customers at some point come back, but we have not estimated what that will be after July. And we do expect just so it's said again that IRS total returns will be more normal next year because, in essence, this year we're digesting what happened in the last two years, because of all the stimulus filers and we would expect it to be more back to the normal flat or up as we look into the future.

[Scott Schneeberger, Analyst at Oppenheimer]

Yeah, certainly that would make sense. The -- and just as a follow-up still in tax, when Michelle was giving her part on revenue per return, she called out TurboTax Live in Premier. So, in the Latinx self-employed investment category, I assume that's probably a little bit more weighted that double-digit growth on the Premier, the investor category. Just curious, is that so? And also for Latinx self-employed and investor group, how sustainable is that growth? You've had really nice growth for a few years. Is there a long runway to that? Thanks.

[Sasan Goodarzi, Chief Executive Officer at Intuit]

Yeah, for sure. Let me start with the latter part of your question. When we look at the assisted category where there is more than a $20 billion TAM and by the way, there is another $10 billion TAM, which is business tax that we've not talked about. So, in total $30 billion. TurboTax Live is $1 billion and so we've got a lot of runway. And as you've heard me talk in prior years, we're sort of in the early days and we got a 10-year run here. Hopefully, now that we've divulged how big TurboTax Live is, you can see how much runway we have. So, there is a lot of runway there.

There is also a lot of runway in our underpenetrated segments. We are truly just getting started with Latinx self-employed and the investor segment, because we are actually under shared in those segments based on all the data that we see. And so when we look at those segments, which is both do-it-yourself and in the assisted segment, we also have an equal runway and we believe down the road, the creator community, the creator segment will continue to become a larger part of those that choose to do taxes and that's an area where we will be focused over time as well. So, that was a long answer to your short question. I think the headline I would leave you with is, yes, there is runway for sure and it's a multi-year runway in all of those areas.

[Scott Schneeberger, Analyst at Oppenheimer]

Okay, great. Thank you.

[Sasan Goodarzi, Chief Executive Officer at Intuit]

You're very welcome.

[Operator]

Our next question comes from Kartik Mehta of Northcoast Research. Please go ahead.

[Kartik Mehta, Analyst at Northcoast Research]

Good evening, Sasan. Just going down the tax segment a little bit, I think Michelle said that you expect DIY segment to be flat and I'm wondering, I know the last few seasons have been a little bit different. And I'm wondering as we move forward to next year, what you'd expect over the next two, three years for the DIY segment growth to be?

[Sasan Goodarzi, Chief Executive Officer at Intuit]

Yeah, thanks for the question. And I'll start with the first part of what you led with. When we look at the last three years and even more historically, IRS returns has been up about 1 percentage and the DIY category has grown about 0.5 point. And so when you look at the last three years with all the anomalies that also holds true. And the way we keep score is our share of the total IRS returns with respect to just now the platform that we have where you can do-it-yourself or we'll do it for you on the other spectrum. But specifically, to answer your question, we do believe over time that the DIY category will continue to grow just as it has grown historically. So, we do believe that this is just I would say, a year where we're digesting all of the anomalies in the last two years.

[Kartik Mehta, Analyst at Northcoast Research]

And just on Credit Karma, you talked a little bit about how banks will -- or credit card issuers will rely on Credit Karma even more during the recession. And I'm wondering if you've seen any signs of banks starting to tighten their credit standards and if that is a benefit yet to Credit Karma?

[Sasan Goodarzi, Chief Executive Officer at Intuit]

We have over 120 partners on our platform and these partners, they are big and and they're small. And with that as context, we're always experimenting and adjusting both in good times and not so good times their credit cycle and they jump between bands, whether they're more interested in those that have a credit band below 620, which is sub-prime or between 620 to 700, which is -- which is prime or near prime and then of course, anything over 700, which is prime. And the point is based on our platform and the demand on our platform and the supply on our platform, we see very good supply across all of the bands because of the focus areas of the partners. And so that drives the strength that we saw this last quarter and we would expect that going forward in context of our guidance.

[Kartik Mehta, Analyst at Northcoast Research]

All Right. Thank you very much. Appreciate it.

[Sasan Goodarzi, Chief Executive Officer at Intuit]

Yeah. You're very welcome.

[Operator]

Thank you. Our next question comes from Brad Reback of Stifel. Your line is open.

[Brad Reback, Analyst at Stifel Nicolaus]

Great, thanks very much. Sasan, as you work to put together the fiscal '23 operating plan in the coming weeks and months, what type of forward indicators are you focused on internally and externally to sort of inform that decision? Thanks.

[Sasan Goodarzi, Chief Executive Officer at Intuit]

Yeah, Brad, great question, because we're actually, we are done with our three-year and one-year plan and the way our cycle works is, while we're in the heat of delivering this year, we finish our planning for for next year. We look at a few things. One, we look at secular trends. We look at facts and figures on our platforms. So, the secular trends are what I mentioned earlier, which is a shift to using virtual solutions and acceleration to online and omnichannel and an acceleration to using our digital money platforms. So, we look at secular shifts and we look at the facts and figures around the secular shifts.

We then look at all the things that actually happens on our platform in our share. If I just use a couple of examples, we have over $1.5 trillion of invoices that are generated on our small business platform. But as we shared last Investor Day and of course, this number is bigger now, our payments volume was over 90 billion. And so you look at, that's very low share. When you look at our share of the assisted category and tax, very low share. When you look at our share of financial products on Credit Karma, credit cards, personal loans, very low share. So, we look at data around our share and our performance around our share and then we will also look at economic factors like unemployment, like default rates, like projections around the economy.

By the way, we're the big best projector of the economy because of the data that we see on our small business platform. So, we look at all of those things. And then the way we put in, put together our plan is sort of worst-case, middle case, best case. And and that's how we manage the company. And by the way, this is something that we're quite good at. And then we manage based on the data that we see, we managed to ensure that we're protecting our long-term investor -- investments while we deliver for today for our customers. So, that's a little bit of a snapshot in terms of how we think about it.

[Brad Reback, Analyst at Stifel Nicolaus]

That's great. Thanks very much.

[Sasan Goodarzi, Chief Executive Officer at Intuit]

You're very welcome.

[Operator]

Ladies and gentlemen, I'm not showing any further questions. Would you like to close with any additional remarks?

[Sasan Goodarzi, Chief Executive Officer at Intuit]

Yes, sir, I will. Hey, thank you everyone for making the time. Thank you for all your wonderful questions. As I said earlier, I'm super proud of our employees across the company and our partners and it's a real privilege and honor to be able to serve our members and customers in these unique times. And so, all of you be safe, be well and we will talk to you soon. Thank you.

[Operator]

Ladies and gentlemen, thank you for participating. This concludes today's conference call.