Intuit Inc at Nasdaq Investor Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Keith Weiss - Morgan Stanley - Analyst : You've been very kind in joining us. So a lot to talk about. A lot of big initiatives going on into it, whether it's the move up market with enterprise, whether it's going into full assist with tax, whether it's the assisted products within online services, but you threw a curveball at me yesterday, you guys announced a new platform relationship with Amazon. And if I'm reading this correctly, we're going to be integrating the functionality of Intuit straight into the Amazon platform, make those services available to their merchants, to their sellers, which would be a massive expansion of your opportunity. So can you talk to us about what you guys announced yesterday and what it can mean for Intuit on a go-forward basis?

Question: Keith Weiss - Morgan Stanley - Analyst : Got it. So I wanted to ask you a high-level question, a big picture question. Coming out of the Analyst Day, I think the investor impression of Intuit, established franchise, strong brand, differentiated go-to-market, like a solid margin franchise. So from our perspective, very easy to kind of put the company into autopilot and just yield on a go-forward basis. You came out at Analyst Day talking about aggressive investment across a couple of key bets that the company is making and you wanting to position Intuit for that opportunity. So what sparked that excitement in you that like let's not rest on our laurels less aggressively go after these opportunities in a way that like shareholders are going to have to trust you, right if you will, in terms of that these bets are going to pay off over time. What is it that you saw that sparked that excitement?

Question: Keith Weiss - Morgan Stanley - Analyst : So in terms of that opportunity, you mentioned this in relationship to the Amazon relationship that is being about kind of data and AI. We made it four minutes into the conversation, we're going to start talking about generative AI here. When I tried to describe the core capability of what generative AI does, it's speeds up the path to proficiency. It enables people to be more proficient at skills that they don't necessarily have themselves. We've seen this in terms of like holding up and probably the most known use case and makes developers be able to code with language that they are not particularly familiar with. When I think about the Intuit customer base, a lot of small business owners that have to be proficient in areas that aren't necessarily what is in their core, right? They have to be, act as a CFO, even though they don't know a lot about working capital model, they have to act as a CMO, even though they don't know a lot about marketing attribution. And it seems to me to be a really big opportunity for Intuit to step in and provide that generative AI to be that accelerant to proficiency, if you will. So you could talk to us a little bit about where you've gone with sort of that opportunity where we are in that generative AI opportunity with Intuit it, where is it working today and what's on the come?

Question: Keith Weiss - Morgan Stanley - Analyst : And I'd imagine there's an awesome ability to optimize those business processes on a go-forward basis. And when we think about the integration of Mailchimp with the core financial management, all of the marketing sort of experiences that you're trying to incent for the end customer, they're going to end up in the financial management system. So you're going to understand how effective those marketing campaigns are going to be and you'll have the ability to give the customer the visibility of not just sort of what campaigns do you execute, but how well do they end up? What was actual sort of attribution of that marketing spend and you're starting to get a broader and broader expense.

Question: Keith Weiss - Morgan Stanley - Analyst : So where are we with the product today? Like maybe use a baseball analogy is probably not going to go over at this audience. But what inning are we at in terms of bringing out that generative AI capability and Intuit's ability to monetize that?

Question: Keith Weiss - Morgan Stanley - Analyst : Got it. In the discussion that we have with investors around generative AI, there's the opportunity side of the equation. Software, the value proposition is always kind of a share of the productivity gains that you push into your end customers. And you definitely will describe a lot of potential productivity gains. But there's also a competitive risk from generative AI on a go-forward basis. And coming out of Analyst Day, I think a question a lot of investors are asking of me because they started to see kind of what the generative AI could do was why do we need the person in the equation, right? Why can't we go the full sort of like in terms of tax? Why do we need a tax professional, why can't the large language model just do my taxes for me, right? When it comes to the bookkeeping, why isn't the model just doing it all for me, what's the necessity of keeping a person in that process?

Question: Keith Weiss - Morgan Stanley - Analyst : Got it. I want to touch on the reduction in force that was executed back in July. 1,800 jobs eliminated. It was about 10% of the workforce. And from an investor perspective, typically, when we think about reductions in force, it's usually either indicating that there's a steep drop in demand or there's a large inefficiency from the organization and neither of which seem to apply to Intuit. Like the demand environment seems very solid for you guys, and you've been always a very efficient company. So knowing that corporate culture is so important to Intuit and these types of moves can be disruptive to corporate culture -- what was the problem you were trying to solve? What necessitated that headcount reduction?

Question: Keith Weiss - Morgan Stanley - Analyst : Got it. So having the right people in the right initiatives, right, and doing it decisively.

Question: Keith Weiss - Morgan Stanley - Analyst : Got it. I want to dig into some of the segments, starting with the small business segment. Can we talk about that first, just kind of the overall macro landscape and sort of the small business environment, it's something I think investors have been getting more optimistic about. We've been getting more optimistic about it. And your comments on the most recent conference call, I think, helped stoke that excitement. I think you talked about the potential of seeing some better sort of spending patterns in the data that you're looking at as we enter calendar '25. Can you talk to us about specifically what you're seeing that, that's getting a little bit more optimistic about the macro as we head into 2025. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 10, 2024 / 1:00PM, INTU.OQ - Intuit Inc at Nasdaq Investor Conference

Question: Keith Weiss - Morgan Stanley - Analyst : Yeah. And we definitely see that across a variety of vendors across a variety of data points. The small businesses definitely seems to be firming up and consumer sentiment going in the right direction, small business sentiment going in the right direction. Another theme that Intuit has been talking to for a while, and we mentioned this is the move-up market, trying to serve a more sophisticated customer. For the past couple of years, the initiative that I have associated with that move up market has been QuickBooks Advanced, a broader set of functionality for those customers. I think that grew 28% in terms of units in FY24, but you recently introduced Intuit Enterprise Suite. And can you talk to us a little bit about -- what's the difference between sort of QBO Advanced and what you now have with that broader Enterprise Suite?

Question: Keith Weiss - Morgan Stanley - Analyst : Got it. So you guys talked about an opportunity to better service 800,000 current QBO customers. So you think about those 800,000 current customers that are already paying into it for QuickBooks. What's the incremental what's the net new within those 800,000 customers in terms of what they can be doing with Enterprise Suite from a financial perspective.

Question: Keith Weiss - Morgan Stanley - Analyst : Got it. So that uplift in the ARPC comes from you're providing kind of net new functionality in terms of visibility and consolidation across these multiple entities. But I'm assuming you're also bundling in more of the online services, so the payroll, the payment and --

Question: Keith Weiss - Morgan Stanley - Analyst : Got it. I wanted to dig into that sort of ARPC side of the equation and how it relates to the broader growth equation for the small business growth. You guys have laid out a formula for like durable 15% to 20% growth. You talked about 10% to 20% growth in the ARPC and 10% to 20% growth in subscribers. And some investors and some analysts we won't name, I have been concerned that you might be pulling the lever too aggressive.

Question: Keith Weiss - Morgan Stanley - Analyst : I'm not going to name names. I'm not in this forum. But how do investors get comfortable that it's you providing more value to the customers. And then we're also seeing the good kind of unit growth underneath it that will prove more durable?

Question: Keith Weiss - Morgan Stanley - Analyst : Got it. There's a lot more to talk about in small business, but we only have five minutes left. So I want to make sure we talk on some of the other parts of the business. Consumer, one of the bigger parts of Intuit, a really big opportunity within the assisted category. I think you described overall tax is a $35 billion opportunity, of which $30 billion is in business tax and the assisted category. Intuit has made its name on the DIY side of the equation, you have 85% share on that side of the equation. What's the right to win assisted? What gets you sort of the momentum in that assisted category to really target that right if you would.

Question: Keith Weiss - Morgan Stanley - Analyst : Got it. So that shock and all, I'm going to use that. In reference to sort of gaining back the share that you guys lost at the low end of the market. And that's important because that's the top of funnel for kind of future tax filers on a go-forward basis. When it comes to like the core assisted filer, right, like the higher-end filer that's going to an accountant today, is there a different go-to-market or a different marketing needed to bring those guys in? Because we wait for the Super Bowl commercials. They're always great, and then we see them like oh, yeah, we got to do our taxes, and we go on to the DIY side of the equation. It seems like you would need a different type of go-to-market, a different type of marketing to get out the assisted category.

Question: Keith Weiss - Morgan Stanley - Analyst : Got it. So I apologize. We have 30 seconds left. So I want to just touch on the concern I hear from investors a lot, and that's about the Federal Government getting into taxes. And there was a direct file offering that they launched last year. 140,000 users isn't huge, but they're expanding that program. They're expanding it from 12 to 24 states. 90% of users said the experience as excellent or above average. You have Elon Musk, not doing you any favors by tweeting that the US government should have a mobile app for this. Should investors be concerned about the IRS getting more and more into your backyard?

Question: Keith Weiss - Morgan Stanley - Analyst : Got it. And just on a positive note, Credit Karma had an amazing quarter in the most recent quarter, almost 30% growth. How durable can that be on a go-forward basis. This business has been somewhat volatile and by its nature, somewhat volatile. But it seems like you're diversifying the portfolio of kind of the product being sold there. Could this become a more durable grower and more consistent grower on a go forward basis?

Question: Keith Weiss - Morgan Stanley - Analyst : Right. Outstanding. Well, thank you so much for the time, fascinating conversation as always. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 10, 2024 / 1:00PM, INTU.OQ - Intuit Inc at Nasdaq Investor Conference