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 first quarter fiscal year 2022 conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer period. If you would like to ask a question during this time, simply press star then the number one on your telephone keypad. If you would like to withdraw your question, press the pound key. With that, I'll now turn the call over to Kim Watkins, Intuit's Vice President of Investor Relations. Ms. Watkins.
Thanks, Latif. Good afternoon, and welcome to Intuit's first 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 statement. 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. With that, I'll turn the call over to Sasan.
Great. Thanks, Kim, and thanks to all of you for joining us today. We're off to a strong start in fiscal year 2022 with continued momentum across the company given our strategy of becoming a global AI-driven expert platform powering the prosperity of consumers and small businesses. We have nearly a $300 billion addressable market driven by digital tailwinds that include a shift to virtual solutions, acceleration to online and omni-channel capabilities, and digital money offerings. First quarter revenue grew 52%, including 32 points from the addition of Credit Karma. Total revenue growth was fueled by Small Business and Self-Employed Group revenue growth of 22% and Credit Karma revenue of $418 million, another record quarter. Consumer Group and ProConnect Group revenue was in line with our expectations in a seasonally small quarter.
As a result of both our strong start to the year and the close of Mailchimp transaction, we are raising our revenue and non-GAAP operating income and earnings per share guidance for fiscal year 2022. Michelle will cover this in detail later. 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, 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.
I'm extremely proud of the momentum we are seeing with Credit Karma. Credit Karma is a data platform with powerful network effects solving a two-sided problem. We are focused on our goal of creating a personal financial assistant that helps consumers find the right financial products, put more money in their pockets, and access financial experts and insights. Credit Karma achieved record high revenue again in Q1. We continue to deliver innovation across all verticals fueled by our proprietary Lightbox platform, enabling personalized experiences for our members, creating a network effect. Within the core, partners' usage of Lightbox reached all-time highs across both credit cards and personal loans. Lightbox more than doubles the average approval rate for members who apply for credit cards on Credit Karma versus outside of Credit Karma. Within the growth verticals, we're solving a larger set of financial challenges for consumers.
Karma Drive is giving U.S. members the opportunity to see if they can save money on auto insurance with usage-based pricing. We're actively exploring expansion opportunities with Lightbox in other verticals, including auto loans, building off of the successes we've seen in credit cards and personal loans. Within the emerging verticals, we remain focused on innovation with Credit Karma Money. We integrated Credit Karma Money into TurboTax last season and experimented with how we could best meet our customers' needs and announced an integration with QuickBooks Online Payroll. Given our learnings, we are excited about launching our improved experiences in the coming tax season. We believe Credit Karma Money is the key to driving growth and frequency of visits over time, one of the many key drivers of average revenue per monthly active user.
Zooming out, we continue to grow members and are focused on building trust by delivering personalized financial products right for members, helping members save money, pay down debt, and get faster access to their money while providing insights and advice. Over time, we're creating a virtuous cycle, which we expect to increase the frequency of engagement, transactions, and monetization across our ecosystem. 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 omni-channel world. 60% of small businesses struggle with cash flow, and we are continuing to innovate to create solutions for customers to overcome this challenge. In fiscal year 2021, total payments volume on our platform grew 40% year-over-year to over $90 billion.
Online payments volume grew more than 60%, driven by an increase in customers using our payments offering. As we continue to innovate for our customers in payments, those using QuickBooks Cash have nearly 3x higher engagement compared to customers who just use QuickBooks Online. To accelerate engagement and usage of our platform, we recently introduced Get Paid Upfront, a game-changing innovation that will help qualified customers get paid soon after their invoice is sent. Our fifth big bet is to disrupt the small business mid-market with QuickBooks Online Advanced. We're seeing strong traction with QBO Advanced, with customers growing to 118,000 in fiscal year 2021, up 57% year-over-year. As we continue to move upmarket and serve these customers most critical needs, we're seeing a services ecosystem ARPC that is 4x higher than the ARPC for QBO customers.
We're pleased with our results and remain confident in our game plan to win. Across all of our big bets, we're building momentum and accelerating innovation, which we believe positions us well for durable growth in the future. This will be further fueled by Mailchimp. I'm delighted that we closed the Mailchimp acquisition earlier this month, which seeks to significantly accelerate two of our big bets, to be the center of small business growth and to disrupt the small business mid-market. Getting and engaging customers remains a significant pain point for small and mid-market businesses. 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 priority is to deliver on our vision of an end-to-end customer growth platform to help customers get their business online, market their business, manage their customers' relationships, get paid, access capital, pay employees, manage cash flow, and be compliant with virtual experts at their fingertips all in one place. Second, disrupting the mid-market by developing a full marketing automation CRM and e-commerce suite for mid-market customers at an attractive price point, enabling mid-market customers to use the power of the platform to grow their business. Third, accelerating global growth with a holistic go-to-market approach. With Mailchimp now part of the Intuit family, we are uniquely positioned to enable small and mid-market businesses to combine their customer data from Mailchimp and purchase data from QuickBooks to deliver actionable insights they need to grow and run their businesses with confidence. This is where the real magic happens.
Our combined platform technology enables us to move with speed, and we've already seen strong interest from our customers. The teams are hard at work, and we are excited about the opportunity ahead. Foundational to our company's success is building a high-performance culture. I wanna take a moment to acknowledge our progress with our diversity, equity, and inclusion efforts. Last year, we declared our focus on increasing the percentages of women in technology roles and underrepresented minorities across our business. We achieved 30% and 13% respectively, and we are inspired to accelerate our plan and push even harder as much work remains to be done. Additionally, we've made meaningful progress supporting our communities. First, we recently announced the Intuit Climate Action Marketplace, which will help 1 million U.S. small businesses find sustainable solutions to reduce carbon emissions.
This is part of our decade-long climate positive goal to go beyond net carbon neutral and reduce global carbon emissions by 2 million metric tons by 2030 or 50 x greater than our 2018 operational footprint. We also recently announced a 23-year partnership with the Los Angeles Clippers that includes economic benefits for the local community with Intuit Dome, the team's future home. Finally, we launched Intuit Ventures to invest in the startup community and accelerate fintech innovation for consumers and small businesses. All the work we do starts with our mission of powering prosperity around the world, and I'm proud of the momentum across the company in delivering on that mission for our customers and communities. Now let me hand it over to Michelle.
Thanks, Sasan. Good afternoon, everyone, and I'd also like to welcome the Mailchimp team to Intuit. Now let me turn to the results. For the first quarter of fiscal 2022, we delivered revenue of $2 billion, GAAP operating income of $195 million versus $209 million last year. Non-GAAP operating income of $555 million versus $334 million last year. GAAP diluted earnings per share of $0.82 versus $0.75 a year ago, and non-GAAP diluted earnings per share of $1.53 versus $0.94 last year. Note that our GAAP results include a $39 million net gain on other long-term investments. Turning to the business segments, in the Small Business and Self-Employed Group, revenue grew 22% during the quarter, with online ecosystem revenue up 36%.
With the aim of being the source of truth for small businesses, our strategic focus within Small Business and Self-Employed is threefold, 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 Q1, driven mainly by customer growth, higher effective prices, and mix shift. Second, we continue to focus on connecting the ecosystem. Online services revenue, which includes payroll, payments, capital, and time tracking, grew 42% in fiscal Q1. Within payroll, we continued to see revenue tailwinds during the quarter from growth in payroll customers and a mix shift to our full service offerings. Within payments, revenue growth reflects ongoing customer growth, along with an increase in charge volume per customer. Third, our progress expanding globally added to the growth of online ecosystem revenue during fiscal Q1.
Total international online revenue grew 39% on a constant currency basis. 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%-20% expected growth in both customers and ARPC. Desktop ecosystem revenue grew 7% in the first quarter. QuickBooks Desktop enterprise revenue grew high single digits, driven by strong customer growth and price increases we put in place late last year. As a reminder, this fall, we transitioned to a subscription model for this year's desktop offering, which we expect to be a headwind to revenue growth in the second half of the year. We expect the desktop business to decline longer term. Moving on to Credit Karma.
Revenue was $418 million in Q1, another record revenue quarter, driven by high levels of monthly active users and revenue per monthly active user. Within the core, we saw another record quarter driven by the combined strength in personal loans and credit cards. The growth verticals also achieved another strong quarter, reflecting momentum in home loans and auto loans. We're developing the emerging vertical by focusing on innovation with Credit Karma Money, part of our digital money offering, though this is not a large revenue driver today. We continue to expect pent-up demand across the core verticals to taper sometime in the second half of fiscal 2022 after a strong year of investment by our partners. We remain excited about the opportunities ahead. Consumer Group revenue of $120 million in Q1 was in line with our expectations.
Looking ahead to the upcoming tax season, we continue to focus on our strategy to expand our lead in DIY and transform the assisted segment with TurboTax Live. As for the ProConnect Group, revenue of $26 million in the quarter was also in line with our expectations. Turning to our financial principles, we remain committed to growing organic revenue double digits and growing operating income dollars faster than revenue. As I've 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 on becoming 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 $3.3 billion in cash and investments on our balance sheet. On November 1st, we entered into a $4.7 billion term loan under a new credit arrangement, a credit agreement to partially fund the Mailchimp acquisition. We repurchased $339 million of stock during the first 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 January 18th, 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 operating income and earnings per share guidance to reflect both the acquisition of Mailchimp and the stronger than expected start to the year in the Small Business and Self-Employed Group and Credit Karma. Our updated fiscal 2022 guidance includes revenue of $12.165 billion-$12.3 billion, growth of 26%-28%, including Mailchimp as of November 1st, and a full year of Credit Karma. Excluding Mailchimp, revenue growth of 18%-20%, up from our prior guidance of 15%-16%. GAAP earnings per share of $7-$7.16, and non-GAAP earnings per share of $11.48-$11.64.
This updated fiscal 2022 guidance includes organic growth for the Small Business and Self-Employed Group of 16%-17%, up from 12%-14%. Expected Mailchimp revenue of $760 million-$770 million, and Credit Karma revenue of $1.54 billion-$1.565 billion, up from $1.345 billion-$1.38 billion. We continue to see opportunities to leverage the platform and drive margin expansion over time. Excluding Mailchimp, our non-GAAP operating income guidance continues to imply approximately 60 basis points of margin expansion in fiscal 2022. Our guidance assumes the Mailchimp transaction is accretive to Intuit's non-GAAP earnings per share in full-year fiscal 2022.
However, we expect an approximately 80 basis point one-time step down in non-GAAP operating margin, reflecting the impact of Mailchimp as we plan to invest aggressively in the business. We expect non-GAAP operating margin expansion to continue from this new level over time, in line with our financial principles. Our fiscal 2022 GAAP operating income guidance includes approximately $165 million for stock-based compensation associated with the acquisition of Mailchimp. In addition, our GAAP operating income guidance includes the impact of the Credit Karma acquisition, along with investments we are making in stock compensation to attract and retain talent. We're confident these are the right decisions to drive long-term growth. We expect a GAAP tax rate of 18% in fiscal 2022.
Our guidance for the second quarter of fiscal 2022 includes revenue growth of 73%-74%, GAAP earnings per share of $0.55-$0.59, and non-GAAP earnings per share of $1.84-$1.88. You can find our full Q2 and updated fiscal 2022 guidance details in our press release and on our fact sheet. With that, I'll turn it back to you, Sasan.
Great. Thank you, Michelle. We are off to a strong start this year with continued momentum across the company, given our strategy of being an AI-driven expert platform that's powering prosperity for consumers and small businesses. I'm proud of what our employees have accomplished this quarter, and I'm excited about the opportunities ahead to find new, innovative ways to serve our more than 100 million customers. Now let's open it up to your questions.
Thank you. Ladies and gentlemen, if you would like to ask a question, please press star then the number one on your telephone keypad. If you would like to withdraw your question, press the pound key. Our first question comes from Ken Wong of Guggenheim. Your question, please.
Great. Thank you so much. Sasan, the success of Lightbox has been very impressive. Just wondering, is there a way to quantify kinda where we are in terms of adoption of Lightbox within that, your core credit vertical, and kinda what that potential adoption could look like? Then you touched on expanding into other verticals. What verticals do you think, you know, are appropriate to integrate into Lightbox?
Yeah, Ken, thanks for the question. You know, in terms of Lightbox, you know, as we talked about at Investor Day, we've actually made significant progress year-over-year in terms of penetration. I think what we talked about at Investor Day is, you know, we had 50% and 40% penetration in credit cards and personal loans compared to, you know, I think 40%, 20% the year before. One, we have significant penetration opportunity ahead of us. I think equally as important, if not more, is what financial institutions are seeing, which is really the payoff for their investments. More and more financial institutions are joining the platform, and this gives us really an opportunity to significantly increase penetration.
I think that's where I would probably give you the punchline. You know, our penetration in credit cards is I think less than 5%, just as an example, and personal loans and other verticals are even lower than that. You know, Lightbox, the trust we build with our members, the trust we're building with our partners gives us an opportunity for significant penetration. I think our sort of best years are ahead of us when you think about Lightbox and particularly penetration. In terms of your question around expansion, you know, auto loans is just one example of where we can expand Lightbox, and there are other areas that we've not talked about publicly.
I won't do it today until we see further proof points where we can further expand Lightbox. I think this is, you know, 13 years of investments that now positions us to really deliver for members, partners, and really create this network effect.
Got it. Fantastic. Appreciate the color. Then if I could stick one in for you, Michelle. When I look at that Mailchimp number, $760 million- $770 million any way to help us understand what that growth might have looked like on sort of a three-quarter basis versus last year?
Hi, Ken. Yeah. You know, we're really excited about Mailchimp, and we think that, you know, we're gonna do some great things together. Their revenue and their new paying user growth was negatively impacted during the pandemic, I would let you know that. They did pull back on some of their marketing spends so they could preserve their profitability, and we did see their churn decline some there too. You know, we're gonna be investing aggressively to drive their growth as we go forward. It won't happen overnight, but we're really excited about the opportunities we see to grow as we look forward. We haven't really given any additional details on what their growth was previously.
Okay. Understood. Thank you very much, Michelle.
Thank you. Our next question comes from Keith Weiss of Morgan Stanley. Your line is open.
Excellent. Thank you guys for taking the question. Really impressive quarter across the board. There's really nothing to pick on in here. I wanna dig into the QuickBooks Online business a little bit. Both sort of the subscriptions and the online services both seeing acceleration in the quarter. Can you help us understand how much of that is kind of like the continued kind of reflation post the calendar 2020 macro impacts, and how much comes from just fundamentally improving attach rates? I know you guys are focusing on higher level customers with QuickBooks Online Advanced. Is that starting to improve the overall attach rate picture in that business?
Yeah, Keith, thanks for the question. You know, I would say the majority, if not all, compared to previous quarters is simply customer growth. It's improved mix based on the traction of QuickBooks Advanced, QuickBooks Live, to a lesser degree and, you know, things like full service payroll and just all the innovation we've been doing in payments with instant deposit, making it easier to use our payments offering, and now our new launch with, you know, Get Paid Upfront. I would say the majority of what we're starting to experience is the actual innovation on the platform and the portfolio that we have, solving a broad range of needs for our customers.
You know, I would say, the bounce back from the pandemic, of course, happened, and we started experiencing the pickup, but that was, I would say, you know, 4-6 months ago. I think now we're seeing the actual true performance of the platform.
Understanding. Then maybe a follow-up from Michelle. You called out again the potential impact on the desktop business from a shift towards subscription. Any way you could help us quantify what, like, those impacts are gonna be?
Hi, Keith. What I can tell you about desktop is, you know, obviously we saw the 7% growth in the ecosystem in first quarter. That was really driven by two different components. The majority of it was two components. First was we saw higher desktop enterprise customer growth and some price increases. Desktop enterprise revenue growth, you know, was high single digits in Q1. The other half of that is really the desktop subscriber mix.
Mm-hmm.
Last year, what we saw was desktop subs grew 48% and outright units declined by 47%. That growth in subs last year, because of the way we do revenue recognition, you get, like, an extra pop of revenue from subscriber growth in the, in Q1. That is what we saw. We do expect to see, you know, some headwinds for that growth as we go further out through the rest of the year, especially with all the subscriber growth instead of outright.
Got it. All right. Thank you, guys.
Thank you.
Thank you. Our next question comes from Kirk Materne of Evercore ISI. Your line is open.
Hi, this is Chirag Ved on for Kirk. Thanks for taking the question, and congratulations on the great quarter. I know it's still early days, but can you talk a little bit about the plan for the go-to-market with Mailchimp? For example, are you planning to approach customers as a one-stop-shop vendor, or do you think both will be sold separately given potential different buying centers and companies? Does Mailchimp expedite your plans to potentially expand QuickBooks into more geographies on a quicker timeline? I guess, how do you expect this to evolve over time as you reach steady state? Thanks so much.
Yeah, thanks for the question. You know, I'll take you back to the three priorities that we've declared, 'cause I think it goes after the great question that you've asked. You know, first and foremost, our number one priority is really about around creating one growth platform. It's really a lot of the work behind the scenes in terms of building, you know, data pipelines and connecting the services, so that the magical power of the data, both Mailchimp data and QuickBooks data, can come together for the customer to put the power of the insights, you know, in their hands. First and foremost is all about the product and creating one growth platform. The second is we see a huge opportunity to serve mid-market.
As you know, we're already doing that from a financial management solutions perspective with QuickBooks Advanced. We're now gonna, in essence, build out the capabilities on Mailchimp and really disrupt the mid-market because this is a huge need for mid-market. I would say third is actually having a global playbook and investing, accelerating our investments in go-to-market, which I think will get at the last question that you asked that I didn't answer yet, and that is, we want customers to have choice. So if customers first want to engage with Mailchimp to be able to take their business online, to market their business and use CRM tools, they can use Mailchimp. But we'll make sure everything is, you know, payment-enabled.
Over time, if they wanna use all of the invoicing capabilities, payroll capabilities, access to capital, ensure that they're compliant, all of that will be enabled within Mailchimp. The vice versa is true. If you're using QuickBooks and you wanna start using capabilities to market your business and manage your customers, all the capabilities of Mailchimp will be available to you, and Mailchimp could end up being, for instance, a nav item on the left-hand side. We will let customers make choice is I think the headline answer to your question. We will go to market separately. We will go to market together.
We will raise awareness and ensure that customers know that there's one place where they can run their business, and more importantly, the power of all their data will be in one place to fuel their success. That's the approach that we're taking.
All right. Thank you so much.
You're welcome.
Thank you. Our next question comes from Sterling Auty of J.P. Morgan. Your line is open.
Great. Thanks. Hey, it's Jackson on for Sterling tonight. Thanks for taking our questions. The first one is actually on the better than expected performance for the remainder of the year from Credit Karma. We're curious, is this, I mean, is it driven more by a stronger bounce back from an impact in 2020 in your traditional verticals, or is this more about having increased confidence, Michelle, in I think what you mentioned on the home and auto loan side?
Yeah. Thank you for the question. You know, a couple of things I would start with. You know, last year, when you look at the full year of Credit Karma compared to the prior year, we grew 37%. Our new guidance for Credit Karma going forward is a range of 35%-37%. I think what you see within that is there has been a macro bounce back, but really a lot of what we're really seeing is the innovation on the platform, the power of Lightbox, the fact that, you know, members are getting better matches to things that they are looking for. Financial institutions and insurance companies are seeing the power of the platform, and it's really just creating that network effect.
I think what we're gaining confidence in is just the innovation, the technology investments in Lightbox, and in context of the macro environment, as we look ahead, that gives us confidence around the performance of Credit Karma. Again, I would just remind us, and this is more of a longer term comment, you know, Credit Karma is a platform, and we're creating an ecosystem effect here. You know, Credit Karma is part of the TurboTax experience, and we're excited for all of you to see what we're gonna be launching in the coming tax season. TurboTax is part of the Credit Karma experience. Credit Karma is part of a payroll experience.
Really think about Intuit as one platform with, you know, many platforms that solve different problems, and that's really what, you know, fuels our confidence as we look ahead.
Okay. Great. A follow-up actually on the tax business. You know, by the end of this second quarter, we'll kind of be into the tax season. We're coming up on marketing time on TurboTax advertising spend. Any color that you can give us on kind of what plans are for the marketing budget as we ramp up into January?
Yeah. Well, I'm not gonna talk about the marketing budget, but what I will share with you is it's very consistent and it's durable in context of what you've seen in the last, you know, couple of years. You know, we are very focused on really fundamentally changing how you get your taxes done if you need assistance. You're gonna continue to see us be assertive in terms of how we raise awareness with you know, 88 million customers that you know, need assistance and how there's a better way to get your assistance. Also the under-penetrated segments that we've talked about, which is Latinx, the investment community and the self-employed. I think what you should expect is our investments on a platform has continued in those areas.
We're really excited about the season coming up, and our marketing efforts will be really focused in those areas to continue to raise awareness.
All right. Great. Thank you.
You're very welcome.
Thank you. Our next question comes from Siti Panigrahi of Mizuho. Your line is open.
Congratulations. Great quarter. Sasan, I wanna ask you about the new business, I mean, new customer acquisition trend that you are seeing. I remember you talked about, you know, lagging effect to, you know, new business creation, in the U.S. Wondering what sort of trend you're seeing on the QuickBooks new customer acquisition side, and what sort of promotion or anything you are doing at this point.
Yeah. Thank you for your kind comments and the question. You know, I would say that it's very consistent with what we talked to you all about at Investor Day. That is that you know, we're continuing to see the acquisition trends that we would expect in the U.S., across the board, both you know, in the low end of the market, but also the trends that we're seeing you know, in the mid-market. Those trends continue. As we've shared before, we're not overly reliant by any means on new business formations. From just a health perspective, I would say U.S. is consistent with what we talked about with all of you a few months ago.
I would say outside of the U.S., again, very consistent with before, the recovery has not been like the U.S. Now, if I were to double-click on that, you know, I would say behind the U.S. has been Canada. I think we're gonna start seeing U.K. and Australia start to come back. Sorry, U.K. and France. Australia is I would say behind, you know, U.K. and France. We do believe that in the next year or less that international will start to slowly bounce back. The reason for just the slowness in international bouncing back is there's just been so many start and stops that, you know, small businesses have just lost confidence. Do I build up inventory?
Do I go hire more employees? Do I increase my own, you know, marketing budget? That they've just been slower in bouncing back. We believe, you know, within the next year or so, we'll see that strength. Net-net, the headline news is, U.S. continues to be strong and match what we've expected and International will bounce back within a year.
That's great. A follow-up to TurboTax question. This is probably the first year you are going to tap into the Credit Karma members who are not using TurboTax. What sort of strategy do you have at this point to tap into such a massive, you know, member base in Credit Karma?
Yeah. You know, we are really excited about just the possibilities of what we can do for members, Credit Karma members and TurboTax customers. Last year really was a learning year, and I think we're gonna learn a lot more, you know, this year. You know, listen, our goal is we want, you know, every TurboTax customer to be using Credit Karma and all the benefits of Credit Karma. We want, you know, every Credit Karma member to be using TurboTax, whether they wanna do it themselves or you know, they need assistance. I think we're gonna be, you know, one year better than we were last year in terms of all of our experiences, in terms of just the investments that we've made in the experiences, and we're excited about it.
Just to put it in, you know, context, at Investor Day, we shared with you our Horizon framework. Horizon 1 being, you know, sort of revenue impact within 0-18 months, Horizon 2 being 18-36 months, and Horizon 3 being 36 months plus. We actually put the impact of Credit Karma integrated as part of TurboTax and vice versa as almost three years out because we really wanna nail the experience. Nevertheless, we're leaning in, and we're excited about the things we're gonna be launching in the weeks to come.
Thank you, Sasan.
Yeah, very welcome.
Thank you. Our next question comes from Michael Turrin of Wells Fargo. Your line is open.
Hey there. Thank you, and congrats on the amazing results to start off the fiscal year. We've talked about, I mean, you've gotten a few questions on tax. We see that on the live technology you're now offering expert setup for QuickBooks as well. I'm wondering if you can just add any color on how far that expert-led vision extends. Is that something you could take into consumer finance or potentially even something like email marketing with Mailchimp? It seems like a powerful addition to the product portfolio and clearly a big bet you've been focused on. Would love to hear more. Thank you.
Yeah, Michael, thank you for your kind words and great question. You know, when we declared our bet around connecting, you know, people to experts and creating our virtual expert platform, you know, we have been, I think we're on to now, I don't know, 5+ years really investing in this virtual expert platform. You know, there are so many underlying technologies, services where AI is being used to ensure that the platform, you know, matches the right customer to the right, you know, expert to make the platform simple and easy to use for experts. We feel really confident relative to just the where we are with the virtual expert platform.
Our focus intentionally has been really about serving customers when it comes to tax time, and helping small businesses, you know, with bookkeeping and eventually also with their taxes, but more importantly, just helping them run their business. We have so much opportunity ahead of us just in that space. With that said, we do have a few what we call, you know, small mission-based teams that are exploring other spaces because we can leverage a lot of the capabilities of this virtual expert platform to serve spaces like marketing, potentially, you know, spaces like financial services. We are doing experiments, but very intentionally to ensure that we can learn.
I think I will just end with the opportunities of where we can take this virtual expert platform is endless. However, the biggest growth opportunity ahead of us right now is helping customers with taxes and helping small businesses run their business. Then as these other verticals become, you know, reality, we'll of course, you know, share our plans with with all of you. It is something that will extend over time horizontally into new verticals.
That's a great answer. Michelle, you've historically not updated guidance before tax season. We've talked about some of the pockets of strength with Credit Karma, but in terms of breaking that historical pattern, are we just seeing a more diversified Intuit come through? Or any comment you can provide just around the change there? Thank you.
Yeah. Thanks, Michael. Yes, this is something that diverges from what we have done historically. You know, historically also, you know, the Consumer Group has been such a large percentage of our business also. Now as we're adding, you know, other parts of the business are growing more, we're adding Credit Karma, and overall the composition of the business is just changing. Also, you know, this is one of the first times we've seen a real pandemic hit like this, and so the growth after the pandemic has also had some implications for, you know, recovery and so forth. Yes, it is a little bit different.
Composition of the company is a little different, but we feel really good about what we're seeing and are very excited about the accelerated growth we're seeing in Credit Karma and in small business and ready to jump into tax season.
Thank you. Our next question comes from Brad Zelnick of Deutsche Bank. Your line is open.
Excellent. Thank you so much for taking the question, and congrats, guys. My question, you had a price increase go into effect during the quarter in small business. Any discernible impact to retention across your various SKUs, particularly from those who haven't attached payments or payroll?
Yeah, Brad. Thank you for your kind words and the question. You know, I'll say two things. One, really the majority of our growth continues to come from customer growth and mix, at a much lesser extent price, so you should just be aware of that. Two, there's nothing that we've seen from the price increase that's outside of the bounds of what we expected. The short answer is no, it's within our control limits, as we expected it based on the testing that we had done.
Got it. If I could just follow up with one more, Sasan. There's no doubt a significant opportunity with Credit Karma Money, and I believe you called out the opportunity for QuickBooks payroll customers to deposit up to $232 billion of payroll funds into a CK Money account. What traction have you seen on this so far, or what percentage of QuickBooks payroll payees do you think you can ultimately capture with something like this?
Yeah. You know, first of all, we've not divulged our traction other than I would tell you, we generally are excited as part of many things that we are providing in our portfolio to customers, giving them, you know, early access to wages. I think a lot of what we are learning and a lot of what we're excited about as we move forward, it depends on the customer and the cohort of customers. You know, there are certain customers that, depending on their situation and how much they depend on living weekly connected to their weekly paycheck. If you live paycheck to paycheck, you are much more focused on can I get early access to that versus if you don't live week to week.
We're learning about those cohorts within our payroll, to your question, and where we can get traction and where it's just not a need for customers. I would just say more broadly, we are excited about early access to wages, both providing it across payroll standalone, providing it through Credit Karma. Frankly, I think over time, this is just something that's gonna be commodity. I think everybody's gonna have a product feature that gives you early access to wages. For us, it's not just about the feature, it's about the ecosystem effect that it creates, for our customers and our members.
Awesome. Thank you, Sasan.
Yeah. Thank you.
Thank you. Our next question comes from Brent Thill of Jefferies. Your question, please.
Sasan, you were clear when the Mailchimp deal closed that this is not just a mail company, that there was a broader platform play for marketing and setting up a website. I'm just curious along that theme, you know, what you're seeing in terms of the most excitement, where you can bring Mailchimp into your clients and ultimately kind of this platform play for the front office and how that evolves. If you could cover that'd be great.
Yeah. Absolutely, Brent. You know, one of the things that we have as a company is called our Big Bet Review, where we take our officers of the company through the experiences of each of the big bets, what we've learned, where we are, and where we're headed. You know, this last Big Bet Review happened to be one where, you know, we brought in Ben and the team, you know, from Mailchimp, and actually walked through the experience in detail, where we are, you know, and where we're going. I would just tell you that, we continue to even get more excited, as we've closed the deal because the needs of our customers are in all the areas that you mentioned. They are.
Every customer is in a different place, but customers are really looking for ways to be able to engage getting new customers. It's their bread and butter. Almost 70% of our customers are looking for ways to get new customers. We now have those capabilities, and we'll integrate it into QuickBooks and vice versa, QuickBooks into Mailchimp. They wanna be able to manage their existing customers in an automated way, you know, in an insightful way where everything is automated. They don't have to know when do I follow up with a customer? What additional products can I sell them? All that can get automated through Mailchimp. One of the things people don't realize is, you know, one of the largest ways that you still engage customers, you know, we see it through what we do in TurboTax, is actually email.
Now we have all those capabilities. We have abilities to put you on mega platforms with all of our digital assets, manage all of your existing relationships, all the email capabilities. More importantly, it's leveraging the power of the data, the customer data and the purchase data to help you understand who's the customer, who bought what did they not buy, who's leaving your shopping cart, and how do you pursue them. You know, it's consistent with what we've talked about before. That's the opportunity ahead, and it's about the work that we do now on the product to put the power of those capabilities in the hands of our customers. We couldn't be more excited to help our customers with their success. Stay tuned.
Thank you. Our next question comes from Kartik Mehta of Northcoast Research. Please go ahead.
Good afternoon or good evening, Sasan. I wanted to ask you a little bit about TurboTax Live, maybe what the trends have been in terms of customers that are already TurboTax customers shifting to that product and new customers, and how you anticipate that trend evolving this tax season?
Yeah, you know, it's a great question. It's one of the things that just really excites us about the Live platform. You know, there's 88 million folks that use an assisted method today. Within the assisted method, you have 10 million folks every year where there's churn. They jump from one assisted method to another, so from one accountant to another or from one store to an accountant. Within the TurboTax base, the do-it-yourselfers, we have four million people that leave and they ultimately go to an assisted method. I think the answer to your question is it's all the above. You know, we've seen conversion improvements, retention improvements.
We've seen TurboTax customers that did it themselves the year before, where they had a life change or they just weren't sure if they, you know, did their home deductions the right way or if they had a kid and the kid went to college, how to ultimately account for those deductions, where they're now using the Live platform, and vice versa. You may use the Live platform and have enough confidence with the year after, and you do it yourself. Then you may, the year after that, bounce back, and now we're seeing, you know, three, four years of trends.
Really it's all the above, with the largest, I would say, driver being folks that use a different assisted method coming onto a platform, and of course, those that have life changes within TurboTax, growing with TurboTax, and using the Live platform. We just see that continuing, as we view this opportunity, you know, with a 10-year lens.
Just a question on Credit Karma. Sasan, you've talked about Credit Karma Money, and that sounds like a very interesting opportunity. I'm wondering, is there any concern that your customers say, "Hey, you're competing with me now for deposits," and that causes issues?
You know, one of the sort of essential strategic principles that we have within Credit Karma is that it is an agnostic platform. Our financial institutions and all our partners, you know, see the power of that, how diligent and intentional we are about not creating our own products, but ensuring that, you know, we match members with a product that's right for them. A lot of the capabilities that we have, you know, within Credit Karma ultimately has an institution that's participating in it. That is not a concern that we have.
You know, our stickiness is very high with financial institutions, and we just believe that that's the beginning of it, especially with the traction of Lightbox, which actually delivers more success for members and more success for financial institutions. It is not a concern of ours.
Perfect. Thank you so much. Appreciate it.
Yeah. Yeah. You're welcome.
Thank you. Our next question comes from Kash Rangan of Goldman Sachs. Your line is open.
Thank you very much. Fantastic quarter, Sasan and Michelle. Sasan, I'm curious to get your take on the issues that are being faced by the U.S. economy. We've got unprecedented labor shortage, we've got a supply chain issue, we've got an inflation issue. A lot of these problems do pertain to the small business ecosystem. When you think of Intuit and the dramatic transformation you've undertaken very successfully with betting on AI, what can Intuit do to solve these problems for small business customers as it pertains to these near-term headwinds that we're facing from your product perspective? Thank you so much.
Yeah, Kash, thank you one for your kind comments, and it's a wonderful question in all those areas, right? The labor shortage, some of the supply chain challenges if you're a product-based business, and certainly inflation is absolutely, you know, impacting small businesses. I would make a broad comment that, I would say, we are experiencing when you couple what happened with the pandemic, you know, it starting in March 2020, where it really I think forced everyone around the globe, whether you're a small business or not, but let's stay focused on small businesses, to reinvent yourself, and it really accelerated the shift to virtual solutions. It accelerated the shift to going online, you know, whether it's how you invoice and get paid, how you do your payroll, how you do your time tracking.
I think that movement, which is just simply continuing, I don't think we're ever gonna go back to the old way. I think this pandemic really has accelerated the shift in those areas that I mentioned, and particularly, of course, to digital money offerings. I think that coupled with this not only labor shortage but also labor movement from job to job, some of the supply chain challenges that generally we believe, as I talk to my peers, will start to get addressed by the second half of 2022, first half of 2023. Inflation is actually causing small businesses to leverage more platforms.
If I then bring that back to, you know, our platform and the fact that, if you use our platform, you know, you can get paid up front, you can get instant deposit, you can do same-day payroll, you can use an expert to ensure that you've got the best deductions, as a small business and to ensure that you're running your business effectively, and the fact that you can do more with less people, if you use, you know, one platform. That's where the power of Mailchimp comes into play, rather than having multiple tools where you're bouncing back and forth between tools, and you're not really sure, what your customer profitability is, when you should follow up with a customer, how to acquire more customers.
All of those things are a thrust to the use of our platform, and our platform is actually built to help you grow your business, with, you know, less focus on labor, and to be able to embrace as much as possible the inflation. Now, ultimately, we have to address over time, and I believe it will get addressed, some of these supply chain issues and inflationary issues, but that's where our platform comes into play and why we're so well positioned for small businesses and the role we need to play to continue to educate them.
Excellent. Thank you so much. In fact, a very quick one from Michelle. How do you assess the long-term margin drivers? I mean, generally, the Street thinks that margin growth is somewhat linear, but generally, these things tend to go up in an S curve, so we often underestimate the true profitability of companies in the long term. So in your case, what are the things that we should be looking for that could drive increased operating leverage in the future? Thank you so much, and congrats.
Oh, thank you, Kash. Appreciate that. Well, in the current year, you know, as I spoke about earlier, we will see a margin adjustment with the acquisition of Mailchimp. We do, though, believe that over time, we will continue to expand our margins as we've talked about from this new step-down level going forward. You know, as we become more and more of a platform, we see opportunities for us just across the company, whether it is in technology and being able to increase the velocity of development on our platform and driving more services using things like money movement across the company and our fraud and risk capabilities, not having to duplicate those across the company.
In customer success is another great example, where we're scaling a common customer success platform so that we can more efficiently and effectively serve customers. In the go-to-market area, really leveraging a common infrastructure to be able to more effectively target
Customers manage our sales and marketing processes also. We do see a number of opportunities all across the P&L that as we look forward, there will be opportunities for us to leverage those.
Wonderful. Brilliant. Thank you.
Thank you. Our next question comes from Brad Sills of Bank of America Securities. Your line is open.
Oh, great. Thanks, guys. I'd like to congratulate on a real nice quarter. I wanted to ask a question about TurboTax, if I might, please. You know, with this being the second year of your, you know, targeting the full service opportunity, what were the learnings from the last year, your first year with this offering? Historically, you've seen this 1%-2% share gain within do it yourself. Do it yourself has gained 2-4 points as a category. Could this potentially accelerate those trends as you gain more intelligence, become more successful with this effort? Just generally, what are your expectations for this year with that offering?
Yeah. Thank you, Brad. You know, I would say two big things. One is full service absolutely has a halo impact on confidence for the customer, which actually gets me to the second point and really the approach, which is we're a platform for our customers. Really, if you think customer, Mac, we want our customers to know that they have the ability to do it themselves. They can access an expert if they need the expert to answer any questions that they have, and/or they can just have us do their taxes for them and do everything digitally. Oh, by the way, midstream, if you choose an expert and you realize, you know what? I don't know if I just want help.
I just want Intuit to do it all there for me, we'll do it all for you. Really our approach, and now that we've had several years of experimenting and learning with full service, is that now we have a true end-to-end platform where we can meet the needs of any customer. The power is actually to grow with customers over time. You know, if they just start out their career or if they're students who they have life changes, you know, we have a platform that will meet all of their needs. That's really the, I would say, the headlines of the answers. Plus a halo effect, which has informed our platform approach as we look ahead.
Great to hear, Sasan. One more if I may please, just on Credit Karma. You know, last year you saw a nice upside in the tax quarters converting TurboTax filers to Credit Karma. Could you remind us, you know, kind of where you are there? Was that some low-hanging fruit initially? You know, what drove that success that you saw in that business? Kind of what is your outlook for that, you know, this year and going forward? Thank you.
Yeah, sure. You know, I would really put last year entirely in the bucket of just learning. It doesn't mean that's gonna change this year. You know, we are a company that's all about moving fast, experimenting, pivoting, and learning, all in context of being stubborn around the vision that we have. Really last year was a learning year, although there were some, you know, nice member growth impacts to Credit Karma from TurboTax. We're really excited and eager to see how our new innovations and experiences on the platform plays out this year and to see what we learn.
I'll take you back to the reason at Investor Day we put the opportunity of Credit Karma as part of TurboTax experience and TurboTax as part of the Credit Karma platform as a Horizon 3, is we're really focused on the customer and member experience and nailing that because we know over time we can, you know, monetize. We're excited about the year ahead. We'll have, you know, 11 months under our belt learning and adjusting and preparing for this tax season. You know, we're excited about these experiences being launched and seeing how they play out in the next couple of months.
Great to hear. Thanks, Sasan.
You're welcome.
Thank you. Our next question comes from Scott Schneeberger of Oppenheimer. Your line is open.
Thanks very much. Good afternoon. First question, in international, Sasan, 39% growth in small business, and you know, it's very nice. Could you just give a little summary of what you saw and where in the quarter? Then kind of a part B to the question is, you've mentioned Mailchimp should accelerate global growth. I'm just curious when and how we'll see it showing up in the category. Thanks.
Yeah, sure, Scott. Thank you. You know, first of all on international, you know, we saw some of the same trends given not only our execution, but the macro environment as we've seen the last, you know, couple of quarters. There's certain countries like Canada that have bounced back a bit more, you know, strongly than there's places like Australia that really have been very slow to bounce back based on the fact that the economy keeps opening and shutting down. Again, our view is, you know, within the next year, international should start to come back from a macro perspective.
Net-net, our trends and our performance, although we're very pleased with it, we believe over time could paint a different picture as the macro environment comes back. You know, in terms of Mailchimp, our focus is the three priorities that I mentioned. We wanna create an amazing product and platform that brings QuickBooks and Mailchimp together. We wanna build the capabilities to go disrupt mid-market. Then as Michelle mentioned, we're gonna be investing heavily in our global go-to-market. You know, I wouldn't overly anticipate a significant change in our international trajectory because of Mailchimp. There's some fundamental things we wanna get right to ensure that we can truly be the platform where you can grow your business and run your business.
Over time, it will certainly have an impact internationally, and we're excited about that because it gives us another, you know, foot in the door outside of the U.S.
Great. Thanks. Just for our last one, congratulations on the Intuit Dome. I'm just curious. Maybe beat out Crypto.com on that one. Just curious on the overriding big thematic marketing push of the company the last few years. Just how should we think about that on the big scale? Thank you.
Yeah, you know, I would say, and I've said this for years, and I think you used to hear Brad talk about this. I think we're the world's biggest hidden secret, and we don't want that secret to hold true anymore. We wanna make sure the world knows, you know, who Intuit is and what our brands are. We have data that shows that the more customers learn that, you know, TurboTax, Credit Karma, Mailchimp now, and QuickBooks, when they learn that they're part of the Intuit brand and the platforms are all connected, it actually has a positive impact on our potential for growth. The way, you know, we think about Intuit Dome, it is not for us, a naming rights deal.
You know, we've had many opportunities, where we've actually been pursued to be part of deals like this, and we passed them up over the years. We did this because, one, it's very technology forward Intuit Dome. We're gonna be helping the community. Two, we're really gonna be able to showcase our brands, and it will be yet another way to demonstrate the benefits that we bring to the market as one Intuit platform and the impact that we can have in the lives of consumers and small businesses. That's really how we think about it and why we're excited about it. By the way, over time, we you know expect the same return on investment as we do with our marketing investments, and that's really what this is.
It just goes beyond marketing to impacting the local communities in L.A., which we're excited about.
Excellent. Thanks.
You're welcome.
Thank you. Ladies and gentlemen, would you like to close with any additional remarks?
Yeah, sure. Thank you. Well, first of all, really appreciate, you know, all the questions. And once again, I wanna just, you know, thank our employees for their incredible hard work, our customers and our partners for the strong start to the year and the opportunity we have ahead of us. We're very passionate about fundamentally powering the prosperity of our customers and communities, and we're proud of our accomplishments, and we continue to believe that we are just getting started. Thanks for your questions, thanks for your time, and we will see you at our next earnings call. Bye everybody.
Ladies and gentlemen, thank you for participating. This concludes today's conference call.