Intuit Inc. (NASDAQ:INTU) Goldman Sachs Communacopia & Technology Conference Call September 6, 2023 6:45 PM ET
Company Participants
Sandeep Aujla – Chief Financial Officer
Conference Call Participants
Kash Rangan – Goldman Sachs
Kash Rangan
Wow. I settled into my seat. Thank you so much, everybody, for your patience, as we get this Intuit session going. A real delight to welcome back home, Sandeep Aujla, former Goldman alumni. I take it.
Sandeep Aujla
Thanks for having me back.
Kash Rangan
Yes.
Sandeep Aujla
It’s nice to be back from a different side of the stage at this time.
Question-and-Answer Session
Q – Kash Rangan
Exactly. So, maybe you could just — congratulations on becoming CFO of Intuit.
Sandeep Aujla
Thank you.
Kash Rangan
Maybe you could just give us a brief introduction, what you did at Intuit before the CFO job, and also what you did during your Goldman days, if it’s not too embarrassing.
Sandeep Aujla
Yes. No. Not embarrassing at all because we were just stick to the daytime hours. Now, I started my career in Investment Banking doing technology tech M&A, the mix of Goldman and Morgan Stanley, and really joined Intuit in 2015. So, I’ve been there about eight years. During my tenure at Intuit, I spent majority of my time with the small business group, which most of you know as, the QuickBooks franchise. And really the mandate for what I was brought in was leaning into my non-traditional background to help accelerate bad business transformation from being a source of [truth for your books] (ph) 1:12, largely an accounting software business, [giving a source of truth] (ph) for your business, to being a platform that has payments, payroll, Mailchimp, time tracking as part of its core offering, so in essence, that platform journey that we’ve been on. And as of August 1, this year, became the — had a good fortune being the CFO of the company. So it’s been a fun ride over the last eight years.
Kash Rangan
That’s great. That’s great. What is the mandate for Sandeep, as CFO of Intuit? What does the Board want you to do? What does the CEO want you to do?
Sandeep Aujla
Absolutely. Again, I’ve been at the company eight years. So, the last five years been amongst the top 20, 24 people at the company responsible for finance for the largest part of the company over 50% of the Intuit’s revenue, as well as working with our CTO, over the last several years as we have leaned into being an AI-driven expert platform. As Intuit, we declared our focused on being an AI-driven expert platform five years ago, long before it became fashionable to talk about AI.
And what that meant is over the last several years, I’ve had my fingerprints and I’ve had my influence on how the company has managed its investments, how the company has leaned into growing as a platform business. How the company has leaned into scaling our profitability by being efficient in how we manage the business and finding operating leverage across the investments that we made.
So, looking forward is continue to build on that great platform, on preserving the value that’s there, but also to help put tangible growth points on the Board. So as I look ahead, it’s an opportunity to continue to lean into, executing across our five big bets, is lean into penetrating a TAM. We have over $300 billion TAM that we are currently 5% penetrated. And as we lean into executing our big bets, as we lean into incorporating GenAI, we see massive opportunity to continue to — for the penetrating a TAM. So, that’s what I’m looking forward to delivering on over the coming years.
Unidentified Analyst
Yes. And we’ll definitely get talking a little bit about AI Assist that you guys announced, Intuit AI Assist you guys announced today. But even before we get there, I’m really curious to get your thoughts on, the state of the SMB environment and confidence of consumers today just given — having the SMB platform, the QuickBooks platform, Credit Karma, and all the other touch points that Intuit has.
Sandeep Aujla
Yes. Great question. And, across our platform, we serve 800 million customers, both mix of consumers and SMBs. So, the perspective that we get on the economy is based on both what we see in our own platform that people use to manage their financial lives, to manage their businesses, as well as externally.
So, let me start with the SMB side. I personally continue to be amazed at the resilience of the small business owners and their entrepreneurship. What we are seeing is that, they continue to have strong reserves. Their cash reserves are higher than the pre-pandemic level, albeit is down about 10%, from where it was last year at this time. They’re having a much better time attracting and retaining talent than what the environment was 15 months ago. And, they are facing less pressure from the supply chain as well as inflation on their cost structure. So those are all, the positive, [the glass] (ph) 4:53 have full aspect.
On the other side, we’re seeing access to capital becoming constrained. The cost of that capital has continued to go up and the pricing power of some of the SMBs continue to get impacted. So net net, it’s a — it remains a pretty mixed picture for the small businesses out there. And we think the environment remains uncertain. And that’s some of the factors that we incorporate when we talked about our guidance a couple of weeks ago. So, that’s on the SMB side.
On the consumer side, what we are seeing is that, FICO scores are down about 12 points, since March last year. We’ve seen consumer balances on their debt is up around 30%, particularly for those in the 600 to 660 FICO. You [layer] (ph) 5:44 in the fact that they’re declaring higher balances and the cost of those, that debt has gone up order of magnitude, just given the rate environment that we are living in.
So, the consumer is feeling that pressure from the higher debt payments, and that’s all before we even get into the student debt repayment starting, which I think happens later this month. So the consumer picture also remains a bit uncertain, but they still have good cash reserves, and it’s a matter of how those cash reserves are preserved or not over the coming months.
Unidentified Analyst
Yes. No, I think that that’s a really good color and into the landscape that you have — the purview you have is unparalleled. And I think that you mentioned actually a hiring and within SMB, and I wanted to double click on that. I know, Kash, doesn’t love that term, but —
Kash Rangan
No. It’s personal. That’s it.
Unidentified Analyst
Yes.
Kash Rangan
So what? To give you the context, I said, we’re going really try and steer clear appreciate terms such as double click, dig deeper, segway, shift gear.
Sandeep Aujla
Yes.
Unidentified Analyst
We’ll expand on that. That’s what I’m saying.
Sandeep Aujla
No, we’ll make sure we keep our ducks in a row here.
Kash Rangan
Yes. That’s another cliché.
Sandeep Aujla
Yes. I know all the Goldman cliché.
Unidentified Analyst
So, I mean, when it comes to hiring, how does that impact Intuit’s perspective and what Intuit is maybe potentially, how it’s shifting the dynamics and your appetite for hiring?
Sandeep Aujla
Absolutely. For us, a couple of things our state is that we have always been prudent in terms of our hiring. We always make sure that we continue to lean into growing our revenues faster than our expenses. The part that comes in, that we make sure even when the times were great about a couple of years ago when everyone was hiring hand over fist that we were being prudent in terms of the headcount that we hire, and we lean into making sure that we are hiring, coders, hands on keyboard or that we’re hiring folks that are going to be bringing incremental revenue helping us go into new growth opportunities for the business.
So, we’ve always been prudent and we — that prudence continues in our hiring in this current environment, what we are seeing in this current environment is that employee retention has gone up significantly. So that means that, we are having to naturally hire less because we have less vacancies to fill. But in terms of our hiring practices, we’ve always been prudent and we continue to lean into that prudence, and hire folks who are going to help us, unlock additional growth opportunities as a business.
Unidentified Analyst
Unlocking growth opportunities definitely brings us to AI, I know you guys just announced AI Intuit Assist this morning, and it really touches on all aspects of the Intuit platform. Where do you potentially see kind of more of an outsized impact, whether it be in QuickBooks or online payments or whether it be in TurboTax or Credit Karma on Mailchimp, we can keep going.
Sandeep Aujla
Yes. No. Absolutely. I know we had an Innovation Day earlier today at 9:30 AM Pacific. Many of you were here in the conference. So, let me just set a little bit of context, and then I’ll definitely address the question you have. As a platform, we have multiple advantages that set us up well in the era of GenAI. First and foremost, we declared our strategy to be an AI-driven expert platform five years ago, and we have been investing in AI talent over those years. We’ve been investing in machine learning models over those years. We’ve been investing in knowledge engineering over those years. So we had a massive head start in this space.
Kash Rangan
And it took five years to do this, so because there is a prevailing view, that you can use any of these generic [alerts and teach it how to do taxes] (ph) 9:23.
Sandeep Aujla
Exactly. And I’ll address that as well.
Kash Rangan
Yes. I’d love too.
Sandeep Aujla
I think that the prevailing view, is sometimes a bit optimistic based on what the reality tends to be on some of these areas. So, we’ve had a head start. On top of that across those 100 million customers, we have a set of data that is uniquely accessible to us because it’s behind our firewall.
We have 60,000 attributes per consumer across their financial lives, across their income, across the expenditures, the categories they’ve tend to spend in. We have a 360 degree view of those SMB across the customers and suppliers. And there are 500,000 unique attributes that we have per SMB, in terms of their cash flow, in terms of their cost of goods, their cash balance, their capital needs. And all that data as I shared is behind our firewall. So it’s uniquely accessible to us to train our models on to help deliver differentiated value to our customers, to in essence make the data from the 100 million customers on the platform available to improve the prosperity of each and every individual participant on that platform.
That is a unique competitive differentiation that we have. So based on that, what we announced this morning was Intuit Assist. It is, in essence, a continuation of our platform going from one where small businesses the consumers came to do the work, to get the benefit, to now having a lot of the work done for you automatically, to where they’re going to accelerate it time to benefit, continued better insights to make smarter financial decisions as a small business owner or as individual. That is Intuit Assist and what excites us for the opportunity ahead is that, we think it’s going to provide us an opportunity to unlock the TAM I shared earlier, 300 billion plus TAM. That’s only 5% penetrated, by making it easier for our customers to come in onboard on to our platform to discover various capabilities across our platform, and adopt those capabilities to get a repeat insights and benefits delivered to them in their pocket, so they can make smarter decision. It just opens up the aperture on how we unlock that TAM.
Secondly, we are uniquely positioned as a business to make sure that, at Intuit there are no dead ends with GenAI, because we’re in the business of providing a customer’s 100% confidence. Sometimes to get to the 100% confidence, you need to go beyond GenAI. And in our experiences, when they’re dealing with a unique situation, when they’re filing their taxes, or they’re dealing with the unique complexity when they’re making business decision with one click of a button, they will be linked to an expert, who will have contextual awareness of their situation and can provide them that insight to give them that 100% confidence. So, that’s an upsell opportunity to drive adoption of those agents.
And thirdly, there’s an opportunity for us to price for this innovation that we’re building into those platforms. So, both in terms of the innovation we’re delivering and the benefits are delivered to the customers and the business outcomes, that’ll deliver to our company. We are quite excited for —
Kash Rangan
Both across QuickBooks and TurboTax, right?
Sandeep Aujla
QuickBooks, TurboTax, Credit Karma, Mailchimp.
Kash Rangan
Yes.
Sandeep Aujla
It’s across the entire platform.
Kash Rangan
And how do we monetize this value add?
Sandeep Aujla
The monetization strategy is across those three prongs I just touched on. One, unlocking the TAM for us by making the product easier to adopt and get onboard and get benefits from. Two, opening up the funnel to live agents to drive that upsell, as customers who want to go beyond GenAI to get to the 100% confidence. And thirdly, we’ve had a longstanding tenant around pricing for value as we add more capabilities to our product.
Kash Rangan
Correct.
Sandeep Aujla
It just opens up the option for us to price —
Kash Rangan
Yes.
Sandeep Aujla
Price for that value that we’re building into the offerings.
Kash Rangan
We’ve not had a price increase in about a year or so, right, for QuickBooks?
Sandeep Aujla
We actually announced one recently.
Kash Rangan
Oh, just recently.
Sandeep Aujla
Yes.
Kash Rangan
That includes the AI capabilities as well.
Sandeep Aujla
That does not. So, AI is not included in the guidance that we provided by a couple of weeks ago.
Kash Rangan
So, will the AI be, will you be able to charge more for this capability or only be paid the three ways you just talk about?
Sandeep Aujla
In the near-term cash, we are really focused on making sure that we are delighting our customers with the AI experiences, that we’re driving repeat usage of those experiences. And as [the two of you] (ph) 13:56 well know, our company, we are always out there experimenting a across our lineup across our products to see, what the pricing, that works. Or even if, down the line there could be standalone SKUs or bolt-on SKUs that are AI focused. So these are things that we are going to be experimenting and, learning from customer feedback. But in the near-term, we are focused on making sure we’re delighting our customers and driving repeat usage of Intuit Assist across the platform.
Kash Rangan
And is it going to be broadly available, at some point, everybody, or what’s the rollout schedule?
Sandeep Aujla
Absolutely. So, right now it’s in beta.
Kash Rangan
Okay.
Sandeep Aujla
And depending on, if you are in the beta, you have access to it. But in the coming months, we will be going to general availability across these offerings.
Kash Rangan
And so you’re comfortable with the ability to scale across 100 million users. I mean, that’s a pretty massive rollout if you make it available to that large of an audience.
Sandeep Aujla
It is. And, we are comfortable with that rollout. And quite frankly, it’s one where we are, we feel we are advantaged.
Kash Rangan
Yes.
Sandeep Aujla
Because one of the things that also behind your question is rolling it back to 100 million customers. If you’re doing it relying on third party solutions, it’s a harder roll out. And it’s a significantly expensive roll out. That’s why we have an advantage in the sense that we have our own proprietary data, we are building our own large language models, which are not just contextually more relevant to the financial situations that customers are trying to address, but they’re also much more cost efficient to run, thereby aiding the rollout.
Kash Rangan
That’s interesting. Can you tell us a little bit about this? Is that where we should be talking about the GenOS platform and what you’ve built? Good segue. So I should not say segue. Right? It’s a good, lead into, GenOS.
Sandeep Aujla
Sure. So, GenOS for the audience context is basically our internal platform that helps technologists, so engineers across the company, leverage our AI capabilities, our large language models to build solutions for all of our products at an accelerated pace. So that accelerated time to development then leads to accelerated time to market. And therefore, the potential uptake and, business benefit from the offering.
So, the GenOS is the internal capability we have that basically helps our developers, develop more efficiently and quicker. And it’s something that’s pretty unique for us across the entire platform.
Kash Rangan
Got it. So, we’re going to roll it out, and customers will start using the assist product. And they are going to be made aware that this is a free trial period upon expiration of which would lead to a subscription? How are they going to be.
Sandeep Aujla
So right now, because when we go to GenOS, a third genre availability, the AI offerings will be in the product. So, we will not — we’re not intending right now to have a messaging round. This is a free trial for period x. It’s a capability that’s in the product. And, over time, one, that will unlock the TAM. Two, just the way the product is structured, it’ll unlock the opportunity to connect with a live agent. And three, we’ll continue to lean into testing to either price for it discreetly or earn the right to increase the prices across the SKUs.
Kash Rangan
Over period of time.
Sandeep Aujla
Over period of time.
Kash Rangan
Okay. got it. The reason I’m dwelling on that is, there have been two responses from companies when we asked them about Generative AI products and pricing. Some talk about how they have a separate SKU, like Microsoft, and the ServiceNow has separate SKU pro plus, which is 60% more than the pro version. And then, they’re going to stick with that and try to sell the SKU. And there are other companies that, that say, well, we’re not going to have a separate, we’re not going to raise prices for this, but it’s going to be part of the product, but it’ll be in a higher tier. So, we hope that people will buy the enterprise plus tier which will include the AI stuff for free effectively. So, yours it sounds like it’s a hybrid, somewhere between the two.
Sandeep Aujla
It is a hybrid, and that’s really just given the unique aspect of our business. Lot of the companies we mentioned tend to be enterprise-based companies. And what we are seeing is one, it drives product adoption because it just makes the product that much more easy to onboard and get benefits from, get insights into your cash flow, get some insights into, can you take on a new job? And should you, get access to QuickBooks capital and buy supplies to effectively execute on that job? Should you refinance your mortgage or your car loan? So those are all things that are going to drive benefit of the platform and have adoption of the platform.
At the same time, we will experiment to see, do we put into certain SKUs and take up the price of those SKUs? That’s what we have been doing over the years. I know we have pretty good experimentation.
And we’re not ruling out that over time, we could have a standalone SKU as an example, say in Mailchimp, you have a Mailchimp essential SKU, and there could be a discrete SKU to help you run your marketing campaign end-to-end. And that’s the bolt-on offering that you could buy. So, these are all things that we want to make sure that we are leaving the optionality open for us to experiment and learn Intuit to see what’s the right offering that resonates with our customer.
Kash Rangan
So, one of the motivations is to increase product adoption. What about the customers? You have 7.5 million or so QuickBooks customers that have already adopted, right?
Sandeep Aujla
Right. How do you get them to value the AI capabilities and pay for that?
Kash Rangan
Absolutely. So, the customers have already adopted QuickBooks as they use Intuit Assist, as they engage with Intuit Assist to get insights into the cash flow. And cash flow is the biggest variable that’s a key determinant of the success or failure of a small business. You have insights such as, well you could improve the cash flow situation as an example by driving pay enabled invoices. But that drives cross-sell and upsell of our payments offering, which is separately monetizable.
Similarly, you have insights around, when you come to Credit Karma to get insights into your debt situation, there’s an opportunity for you to get better cost of debt by refinancing. So, these are all opportunities that we think drive that cross-sell, in addition to driving increased adoption. Its 7.5 million plus customers, but that’s a fraction of the TAM that’s available to us.
Unidentified Analyst
And I wanted to actually ask you a question still on Generative AI, but more on the cost side. And when we think about like the models themselves, right? We’re talking about it really being embedded into a variety of different components and use cases within the Intuit platform. Are you training individual models across those different areas? And how are you managing the costs for something like that?
Sandeep Aujla
Absolutely. There’s a couple of points there. One is if you rely purely on external models to run your GenAI as a company. Those are quite expensive. Those models you’re paying per character are to process for answer and the cost scales up pretty quickly. That’s where we are leaning into building our own large language models. So currently, we do use some external models, and we also have internal large language model that we are using, and the teams are working on building more models.
So, it will be a mix of those. And that’s what, quite frankly, gives us a competitive advantage, not just in the experience we’re delivering to our customers. As an example, if you were to go to one of these external models and ask for help in doing a journal entry, the model would think you’re talking about writing a journal like a nighttime diary as opposed to when you come to our large language models because they’re trained on financial data and they have the contextual awareness that you’re asking financial question, they will answer the general entry question around what’s the right general entry to make depending on the expense or situation you’re dealing with. So, it’s a competitive advantage that just also happens to come with a cost structure advantage as well.
Unidentified Analyst
Yeah. That’s great. And is that included into your guidance? Cause I know you mentioned that the top line contribution is not right now.
Sandeep Aujla
Exactly. So sorry, I missed that part of the question. So, cost of development and running the GenAI models is included in our guidance. We are not including the potential business upside from GenAI in our models — in our guidance, sorry. The improvement in retention can be a pretty powerful level too. you know, improvement in retention, conversion rate, using QuickBooks as an example and merely because I spent years in that business.
You have many customers that come at by QuickBooks. And then they discover a few weeks later that, maybe the product is too complex for them, and it’s taking them too long to set up or is taking too much work to get repeat benefit from it. So, they’re tricked. Now with GenAI, we could, in essence, help them seamlessly get onboarded. Instantaneously give them the benefit and insight into their cash flow, insight into when it’s the right time to maybe add an employee to help, uplift their revenue profile as a business.
So, they’re getting instant first benefit and much more seamless and almost no work repeat benefit that just drives better, product retention, to your point, as well as the conversion because now we’re having them come in, experience that product and convert from maybe a free trial into a paying user.
Kash Rangan
Got it. I’m going to ask you my least favorite question. Probably it’s the least favorite question or topic for a lot of people here. Like taxes. Which we all dread doing. I dread doing taxes, but it has to be done.
Sandeep Aujla
That’s why a lot of people are delaying doing their taxes. I know.
Kash Rangan
I know. Lessons learned in the fiscal 2023 tax season and lessons applied to fiscal 2023, can you just talk us a little bit about that?
Sandeep Aujla
Yeah, absolutely. Let me share some of the learnings from fiscal ‘23. So one is, I think us and the entire industry including the internal revenue service were surprised by just how much of the COVID era filers who filed their taxes just to get the COVID benefits was still in the baseline. So that, in essence, was, the key factor that led to our, performance in the tax businesses past fiscal year being below what our expectations were for that, that business. So, it’s largely a macro impact. The biggest learning there is that consumer behavior is just really hard. to, to predict.
And when given a chance, you should almost bet on the ability of the American populous to in it, during their taxes. So that was a learning. But let me share some of the real positives that came out this off, this past tax here.
One of the big opportunities for us as a business is the 87 million filers who file their taxes as an assisted. So, meaning they work with someone else, that signs a tax return on their behalf. And that’s an up market that is fragmented i.e., inefficient that we have an opportunity to disrupt using, GenAI capabilities and our live platform.
And what we discovered this past year, in our full-service offering is that the product recommendation score was 84. And most of you who look at product recommendation score, something in the 60s is considered very high end. And a lot of our products are in the high 40. So, a score of 84 means we got pretty solid product market fit. So, we’re actually looking forward to leaning into a go-to-market motion to really drive the penetration of assisted category there next year. So that was one excellent learning that came in.
The second learning that came in is that across a Credit Karma platform, we have about 45 million monthly active users, about 129,000,000 members, and they all need to get their taxes done. And by improving the integration between, Credit Karma and TurboTax by having customer be able to take their Credit Karma information into TurboTax and get the taxes filed. We saw a 5x increase in number of customers going from Credit Karma to TurboTax.
So, we’re leaning into making the experience even more seamless next year. And vice versa, we saw a 45% increase in TurboTax customers adopting Credit Karma Money to get access to their tax refund within minutes of the IRS adopting it.
So those, while it was a tough tax season, there were many good learnings that came out of it that one has only bolstered our confidence in our long-term opportunity with the tax business.
Kash Rangan
Have you ever thought about having a promo and say, you know, if you if you work at a credit card, my customer, you want to get your taxes done for free, Generative AI, our product will help you do that, but it’s only on one day or two days, right, and then get people to see how valuable it is. And so, or you do it one particular season, next season you go back to normal pricing. You could instantly convert 87 million or whoever that’s intersection of 87 million and your Credit Karma customer base, not that everybody would be, that’s a different demographic of check completely understand.
Sandeep Aujla
And the two of you have known our company for years, you can rest assured we are floating around disruptive ideas as a business and experimenting with those ideas all the time.
Kash Rangan
Click here to pay your taxes.
Sandeep Aujla
Without giving away too much competitive intel, stay tuned for all to implement all the learnings from this year into what we bring to market year.
Kash Rangan
Thank you. Thank you so much. So, there’s we’re onto something here. I mean, I haven’t made it up.
Unidentified Analyst
Collective thinking around it.
Sandeep Aujla
It’s the least we can do to make taxes as exciting as they could be.
Kash Rangan
Exactly.
Unidentified Analyst
I’m pulling on that thread. How creative do you think Intuit needs to be to continue to drive the user growth that you guys have been seeing. And I know your long-term goals are still to drive user growth of 10% to 20%. And so maybe walk us through that within your SMB segment as well as, also the other side of the house, which is more of the ARPC or average revenue per customer.
Sandeep Aujla
Sure. Absolutely. And your question is mostly focused on the small business instead of…
Unidentified Analyst
Switching over a little bit to that.
Sandeep Aujla
Absolutely. So, in our small business segment, our growth algorithm is 10% to 20% customer growth, 10% to 20% ARPC growth. And, we continue to see, meaningful runway ahead in terms of that, of the customer growth. We have significant, opportunity in the mid-market as well as the core SMB. We drive our core SMBs as those with zero to 10 employees and mid-market as those from 11 to 100 employees. And over time, we expect to scale that up. But there remains opportunity for us to continue to lean into driving that product adoption, both in the U.S. as well as the international geographies that we are a part of.
And our — the acquisition of Mailchimp has only opened up the aperture there. Mailchimp is really going to be the tip of the spear in helping us drive international adoption. One of the delighters that we had when we were going to the through the diligence process on Mailchimp is almost through happenstance, purely through passive approach, the company had half its revenue internationally.
So, what we have done is, we have taken a deliberate stance in how we lean into international growth, including translating the product into five languages that have the largest addressable market out there as an example, Spanish, Portuguese. And what we’re seeing is better product adoption and an uplift in the funnel conversion metrics by just doing good language translation.
And now we are leaning into the localized go-to-market motion and the localized lineup across that. So, we expect that to drive international growth. And on top of that, the mid market runway on Mailchimp and our core QB offering just remains strong. All the improvements we’ve made, we are seeing Mailchimp mid-market retention be the highest and it has been in the last two years. So, all of those factors give me confidence in our 10% to 20% customer growth algorithm for the small business segment.
Kash Rangan
Sasan, in case you’re listening, Sandeep’s doing a great job. He does listen. Hey. I mean, sometimes.
Sandeep Aujla
I’m sure he does.
Kash Rangan
He was here last year on the same stage.
Sandeep Aujla
Okay.
Kash Rangan
Yeah. Yeah. pulse check anybody with the questions for Sandeep. If you have a question, I see one raised hand. Can we get the microphone please, all the way in the back?
Unidentified Analyst
Thanks for taking my question. I guess maybe when you think about GenAI, to what extent can you use that? Maybe the tool to be very disruptive at the kind of the core DIY part of the market right, where you have this, like, large group free users and also just long tail of competitors where it feels like you guys could probably gain another leg of share just either by being very disruptive to your product or just through pricing. It would be great to get your thoughts on that.
Sandeep Aujla
Got it. I missed the first part of your question. Your question is basically our opportunity as Intuit to be disruptive in DIY category using GenAI?
Unidentified Analyst
Yeah. Precisely. Yeah.
Sandeep Aujla
Yes. Absolutely. I think, GenAI allows us to be disruptive across all bands on the tax category, assisted, as well as DIY. A couple things on the DIY opportunity that we have is everyone dreads doing their tax. It might come as a surprise to some, but folks don’t like to do their taxes. And with GenAI some of the things that we experiment even this year with TurboTax Express, we were able to get people through the tax experiences. Some people through the tax experience, I should say, in 5 to 10 minutes.
So, GenAI order of magnitude improves the ability for us to make that tech spot experience particularly for the simple filers that tend to be largely DIY, just that much more seamless, which, I agree is a disruptive opportunity. And you layer on to that, the unique competitive differentiation we have in terms of the 60,000 attributes we have on the consumer, the large data set and our own large language models, I think we do have a massive advantage, vis-a-vis other offerings in the marketplace to be disruptive, not just in the DIY category, but also in the assisted category.
Kash Rangan
Any other question? We had a question on the guidance for SMB 16% to 17%. That’s a little lower than where you’ve been operating or maybe the small business online ecosystem has been running significantly faster. So, if we don’t have a recession, it looks like Jan Hatzius our Chief Economist has been right all along in calling for a soft landing. We call it software landing. It’s patented by Goldman. Hopefully, it will be. If we have a soft landing, what are the upside factors that could cause that number that projection to be conservative.
Sandeep Aujla
You know, what I would say about a small business, is that the context is this last year, the business grew 24%. Four points of that growth came from the acquisition, the timing of the acquisition of Mailchimp. So, the organic growth rate is 20% on that business. We’ve shared previously that 80% of the business is, subscription based. So, it’s a recurring revenue, making it, quite predictable. And we saw really good, trends in the areas we’re focused on, such as, mid-market and the live platform as well as our opportunities in the fintech area such as our money offerings. So that is all the areas that we have confidence that goes into a guidance of 16% to 17% growth.
Now at the other hand, we are seeing a pretty uncertain environment out there with all due respect to Jan’s and his perspective, we take perspectives from an external folks such as Jan’s, but also combined that with what we are seeing in our platform. So that’s part of the prudence we’re taking in our guidance just because we do expect the next 12 months to be uncertain. And if you don’t want to be banking on expansionary environment, hence the guidance that you saw from us coming out.
Kash Rangan
Got it. That note perfectly ended on time. It was perfect. That was a great landing. That was a good landing.
Sandeep Aujla
With the two of you managing it, I wouldn’t be surprised.
Kash Rangan
Thank you so much, Sandeep.
Sandeep Aujla
Thanks for having me.
Unidentified Analyst
Thank you.
Kash Rangan
Welcome back home and thank you so much. Let’s jump for cocktails at 5 o’clock. Thank you.
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