Thanks very much. Appreciate everyone making the time. We're closing out day two of the Wells Fargo TMT Summit, here at Terranea in sunny Southern California, with a good-sized room for a later session. Really pleased to have Mark Notarainni, General Manager of the Consumer Group with Intuit, a company you've been with since 2009.
Yes.
That's a very common, when I ask someone from Intuit how long you've been there for, it's always measured in decades.
Yeah.
It feels like not years. So congrats on that. Very much appreciate you joining us and making time for the conversation today.
Yeah, no problem. Thank you, Michael. Yeah, it's been an incredible journey and I never thought I'd be at a place for 17 years coming up in February, but it's an incredible place to work.
Do you wanna just start with your background? We know you're General Manager of the Consumer Group now, but just the evolution of your, your time at Intuit, and also if some of that at all ties with what keeps employees there.
Yeah, of course.
For so long.
Yeah. So I started off, you know, 17 years ago in February, as the director of actually our contact centers for TurboTax. That job was amazing, mostly because I got to connect with customers, and I really, really got to learn what taxes means to the American consumer, 'cause I came in with a very, very different perspective of what taxes meant, right? It was a chore, it was a burden, but when you actually get on the phone and start talking to customers, you realize it's much more about the money, and the money is large for many customers in terms of the refund, almost $3,000. That money goes a long way for consumers. They don't go out to Best Buy and buy large-screen TVs. In many cases, they're paying off debt. They're trying to invest, etc.
So that really gave me this really incredible insight into what we do, and it really connected me with the business, and over time, you know, when I started, I think, you know, it's probably not exactly accurate, but I think about 40% of our business was still desktop software, and we were just in the migration to online, and we had tipped past 50%, and when we moved to TurboTax Online, it gave us an incredible opportunity to do more services for customers, and that's really where I grew in the business, where we started to launch things like TurboTax Live coming out of that group, and you know, just to tie it back to why people start and stay at Intuit, this company is an incredible company at reinvention, right?
We started off as a DOS company, which is crazy to think about, and now we're at the forefront of AI. And, as a, for me personally, it's enabled me to do so many different things. The company has enabled me to do so many different things and push the envelope on what's possible, and it's enabled us to make that transition to where we are today. And that's a really fun environment to be in.
That's a really interesting tie between contact center and the large.
It is.
Expert network. We were joking before this. It's usually kind of a lighter, seasonal conversation around tax. It doesn't feel like that's the case this year for a few different reasons.
Yeah.
But before we get into the kind of the more forward-thinking conversations, I wanna just take a moment to reflect on the 2024 filing season and how that played versus your expectations. The last couple of years have had some filer noise. Attached to just some COVID,
Sure.
Related filing impacts. Was 2024 the year you started to see more normalization of those kind of filer statistics? And how would you characterize the puts and takes of the season from the Intuit perspective?
Yeah. At the macro level, we definitely saw more normalization. I don't think it was 100%, but it was largely normal from a patterns perspective. That at a macro level was nice to see. On our front, I was really excited about how we ended the season versus where we started. And you know, when you look back at fiscal year 2024, we made an enormous bet on assisted taxes. And the reason why we made that bet is because it's a $40 billion TAM when you look at biz tax and consumer tax going to assisted category. And we learned an awful lot through the course of the year, including up until October 15th, where we transformed our go-to-market, we transformed our product experiences, and we actually grew the business in TurboTax Live 17% last year.
And it became 30% of our overall revenue in the Consumer Group, which, by the way, personally is very gratifying because I was part of the team that initially launched TurboTax Live. So it's kinda cool to see the evolution of it. But more importantly, is that it gave us a lot of confidence in what we can do to actually disrupt that category, which is a key part of our long-term strategy, and continuing that growth on.
We're gonna hit on live a bunch of times, aren't we?
Yes.
One question that we're getting a lot of, so I just wanna kind of introduce it into the start of the conversation as well, is just there's some back and forth. There's always noise around tax season and, you know, different experimental programs and things. More recently, there's been questions around new administration and, what areas will come into focus versus what might be de-emphasized. I thought Sasan hit it very succinctly on the earnings call, but just in terms of Intuit's view on if that at all changes the opportunity set for you, how you're thinking about the new administration alongside all of the important things that you're working on, just how to provide Intuit's perspective on that.
Yeah. I think, just like very tactically in my world, right, in getting prepared for tax season and our work with Credit Karma, it really doesn't change much, right? Because our consumer problems are still the same, right? Where am I gonna get my taxes done? How am I gonna file? How am I gonna ensure that I get the biggest refund that I could possibly get? And how can I get it really fast? And then what can I do with it through Credit Karma? So those, that's not changing through the election cycle. You know, when you hear the new administration, they talk a lot about government efficiencies. They talk about managing risk and fraud across the whole system. How can they drive that out of the system? Those are all great things. It's not necessarily tax-related.
But what we believe is that we can be a big part of helping them. What they have talked about is tax code simplification. We've been very vocal supporters of simplifying the tax code. The tax code today is something like 17,000 pages long, and that's grown exponentially over the years, because it's increasingly used to drive economic policy, to drive political policy, etc. And so what we are totally aligned with that, and we wanna help them understand where are those pain points that customers have? And there's no one better to do that than TurboTax because we have all that data and information. We know exactly where customers struggle and what are the elements of the tax code that really cause pain and frustration for customers.
And so we've been very, very vocal, and it really hits directly in our mission of powering prosperity, right? Because this is a big burden for American consumers, the tax code.
Yep. No, that all makes sense. Just before we get into some of the specific drivers, the long-term targets, acknowledging the earnings growth of Intuit remains as consistent as ever. The mixed shift of revenue growth has changed a little bit.
Within that, the consumer targets have come down a touch. The Credit Karma targets have just been kind of, they've evolved, right?
As that business has evolved, and cyclicality has certainly played a part in that. Just help us understand what goes into that planning cycle, that decision to kind of tweak those long-term ranges, what the considerations are, and what gives you confidence in the 6 to 10, the 10 to 15 on a go-forward basis?
Yeah. So on the 6 - 10 side, when it comes to taxes, we're in the midst of this transition, right, of a DIY, do-it-yourself company to a services-based company. In that transition, it takes time to kind of build those markets, change market perceptions of who you are, which ties to some of the marketing questions you probably have for me that we've done. But what we believe is we wanted to give us time to actually manage through that transition, so that we can lead our experiences and drive our business forward. When you look at what we did last year, I said 17%. We are very much committed to 10-15% in Live, which is gonna become an increasingly important part. There's a lot that we have to do in order to drive Live to that 10-15.
We have to change our go-to-market. We have to really revamp our experiences, and we have to execute flawlessly, and we are going to have a transformational product experience this year. We're gonna have a transformational go-to-market experience that actually started earlier than we've ever done before, but our results that we're seeing across our product experiences and our marketing experiences give us a lot of confidence in that 10%-15%, and we believe in the interim we needed that 16.6-10% growth because we're still a large part of our business is DIY.
Yeah.
We're gonna win there as well. But it's gonna take us time to grow, that new category.
I mean, you touched on it a few times, so I just wanna follow up on it now. The decision to advertise earlier, what informs that decision? What were you looking at that said maybe there's a signal here that we haven't been taken advantage of?
Yeah. So there are 85 million customers that file in assisted today, right? That's the size of the customer size there. About 12 million actually switch every year in that category. They do not switch between January and April 15th. They've already made their decision, which is historically, as a DIY software company, that's where you market because that's where your customers are making their decisions and transacting, which is great. We've done; we've been amazing at that as an organization. What we learned is that most of that switching and that decision to switch happens between April 15th and January 1st. So we wanted to test the timing of that and could we intercept those customers with a message of, "Hey, we've got services," and would that raise their heads and engage with us?
And we were very excited about what we saw with that. Very excited. And then the other part that's very important is the reasons why they switch. The biggest reason they switch is pricing. And so our campaign was all about beating price, which we know we already do naturally, but we needed to raise heads, intercept those customers when they're making that decision, let them know we have services, and we can do it at a very competitive price point, with a much better experience. And so, what you'll see now is that's gonna inform our campaign going forward into this new tax season. But it's also going to change how we think about our consumer ecosystem and how we're going to now have a seamless experience between CK, Credit Karma, and TurboTax and be able to engage with customers year-round.
That's gonna be really transformative for us.
That's actually super interesting. And I think super important in the context of just adjusting Q1, because it, it alters the expense profile a little bit. And, you know, Intuit historically does not adjust guidance until after tax season. So that very normal for that not to happen, but it's led to a lot of investor questions on, is the margin shape changing at all? And, and I understand the way I understand this is you take a full-year planning perspective.
You're not. If you're adding budget, you're just spreading it differently.
Exactly.
So investors shouldn't be interpreting Q1 as budget will continue to increase the way that I think some are, correct?
No, that is correct. You know, this is all part of our maturation, as a services business. We would spend that money between January and April. The reality is those customers aren't making the decision in January and April. How do you move those dollars and actually make it more efficient with the current dollars that we have? That's really what the strategy was.
Okay. That's all super helpful. What else should we think about in terms of the drivers of growth within TurboTax? We know you have dominant market share in DIY. We've seen live success, and you just provided some metrics around that. Help walk us through things like fully assisted, do-it-for-me type of tax offering. Is that something we'll see more effort behind this year? And then maybe business tax also, if you can kinda touch on that.
Sure.
How that sort of might fit into the overall strategy.
Sure. Yeah. So, just maybe to, there are three key elements for our growth in the consumer team. One is winning in DIY. The other is disrupting assisted, which is all the live stuff, and I'll get to that, and then the third, which is really exciting for us, not just this year, but for years to come, is becoming a one-consumer financial platform between us and between TurboTax, sorry, and Credit Karma, and I'll touch on that in a second. But in terms of like assisted, we talked a lot about the growth that we saw, the 17% growth in live. It actually was, we doubled our growth in full service last year, and we had 3X new customer growth in our full-service offering, so we're very excited about what we did, and we delivered that with an 85 product recommendation score. That's incredible.
It's one of the highest in the company, and what we were able to learn in that is while we broke through on the product side and we got to product-market fit, we were still not delivering a services-based experience. So this year, we are going to radically transform our full-service offering. It's gonna be about our expert. It's gonna be about matching our expert locally with that customer, and with the capabilities that are actually relevant to your tax situation. We are uniquely positioned to do that. So that's one. You'll see that, and we're starting to roll it out, actually starting today, and you'll see over the next couple of weeks, how we're doing that. The other piece is we're gonna change our go-to-market. We're gonna be local. We're gonna be near you. There are six million searches that happen for taxes near me.
We have not been in the history of TurboTax, but we never show up in there. This year we are gonna show up there with our experts, with their ratings, with their capabilities, and with our experts and our Virtual Expert Platform. We're within 10 miles of a vast majority of the taxpayers within the U.S. So that's an incredible unlock for us as well. When you talk about business tax, that's largely, that's entirely assisted. Business tax is about a $13 billion TAM. We have zero there. We rolled out a product last year. It was what we call a Horizon 3 product. We got a lot of interest in that from customers, but we were not deployed across the entire country. We were only in maybe 50% of the country. We will be 100% enabled this year.
And what we learned in that experience is what we actually need to build in the product, to drive conversion, of those customers that are small businesses and filing their personal taxes. And so we're very, very excited about our release this year. It's still early stages, right? We may call it a Horizon 2 product, but it's a massive TAM, and we believe we have a right to win there, especially as you think about our QuickBooks ecosystem.
What's enabled that journey of what you touched on with the experts and localization? Was there a scale factor, a learning factor that you needed to get to, to be able to match experts with more of an optimal, like, fit than what you've historically done?
Yeah. So historically, we've never done it. Last year was the first year that we've ever done it. We've been a national brand, right? We've been operating at a national scale. And you do that when you're a software company. When you're a services company, you have to be local. And so last year we rolled that out. We had a couple hundred experts that we tested with. And so we learned. And now we're scaling based on what we learned. And it's very different, and it's very difficult. But we've got our plan in place, and we're really excited about bringing that to life this year.
I mean, it seems like that could just help with overall retention and engagement.
Absolutely.
Is that the right way to think about it? Like, where else should we think about that potentially adding value? Customer success stories probably go up, but what are the sort of markers that you're gonna continue to watch?
Well, so we see engagement. And so we're where we were local last year; we saw a significant increase in engagement and conversion. And so yes, knowing that my experts in LA helps me feel comfortable as a customer. But then knowing that my expert also has done crypto sales, has done other things that are relevant to me, drives even more confidence. And so that's those are the markers: engagement and conversion. But then to answer your question on the ecosystem opportunities, it does enable us to actually start to help customers beyond taxes. And that's where it gets really exciting for us with the Credit Karma platform and the integration there. Our experts can now start to help customers make better money decisions, help them build credit, help them manage their money, help them move their money in the ways that they want to.
At the end of the day, for 70% of Americans, it's about getting that refund and managing it. That it's not about taxes. It's about the money, right? So.
So shifting a little bit to Credit Karma, but tying it together, we've always thought about Credit Karma as with TurboTax, there's kind of a gap in engagement generally, right? Like, you file your taxes and just kind of generally wait and appreciate that you're saying you can engage with them earlier. But what Credit Karma is quite good at is getting you to engage very regularly.
Amazing.
Right? Any of us that have the application have been convinced to open it over and over again for different reasons, right? So is that part of the thought process on just capturing more of the customer profile and being able to engage more actively? Maybe just help us tie together the coupling of Credit Karma and TurboTax and what you see and where that could ultimately end up from a user perspective.
Yeah. So it really is exciting actually because we have 44 million returns within TurboTax. It's a once-a-year product, but it's very intense and it's very personal. It's a story of your life in essence in the form of your financials, right? Where you live, what changes you've made, where you spent money, where you've not spent money. And we've developed an intense amount of trust with customers through that. We're, that's a great sense of pride for us. On the Credit Karma side, we have 144 million members, 43 million monthly active. And they're solving real financial problems in there. They're managing their credit. They're making credit card decisions. They're trying to build their credit. And the power of the two coming together is actually about creating seamless experiences so our customers can navigate through their much easier this year.
A vast majority of our customers will have a zero-click experience, meaning they're just kind of navigating through all of our products. And that means with consent, their data will go with them, which means that data can help them make even better financial decisions in Credit Karma. And it allows us to drive retention because we'll be able to communicate with them on a more frequent basis, but more relevant communication, not like, "Hey, remember, taxes are coming up in June." That's not gonna resonate with anybody, right? In June, if we sent that to somebody, they'd be like, "Oh, okay, thanks." But now within Credit Karma, we can say, "Hey, based on your information, have you thought about, refinancing?
Have you thought about taking out an extra credit card because you see you've done X, Y, and Z?" and so there's just a really great opportunity in that ecosystem now to become a permanent part, and a habitual part of the consumer financial journey, not just once a year in taxes and not just doing credit and credit cards in Credit Karma, but actually being about managing their money more efficiently.
Can we also just touch on the improvements that Credit Karma saw in the most recent quarter? You know, it certainly sort of outpaced our expectations. How much of that is just getting through some of the macro or the product improvements you continue to embed that you would point us towards that should also enable more conversion, maybe what you're seeing that's driving the improvement?
Yeah. So, there's certainly a macro element, right? As the macro environment got healthier and continues to get healthier, that's also obviously great for us. But behind the scenes, and probably really what is the enduring part of what we've been doing is, we've been deepening relationships and we've reimagined our entire Credit Karma experience. So we've redesigned it from the ground up. That was a very difficult thing 'cause that product had been optimized for years, and we reimagined it so that we can drive engagement. And we saw that engagement happen. We actually saw two to two and a half x engagement rates with our new products, which every time a customer engages, they learn more about themselves and what's possible, and then they consume a service. So that is enduring, and that's all the work that the Credit Karma team has done.
The second is, you know, this, the integration that we did do this year, the embedded experience that we did between TurboTax and Credit Karma. When we delivered it really well, it drove more deposits into Credit Karma Money. About $4 billion worth of refunds were deposited in Credit Karma Money. And so customers could start to build their credit off of that, and members could then start to move their money around where they wanted to or go into high-yield savings, which started to deepen our relationships there. And, just to put it into context, we in TurboTax do about $110 billion worth of refunds through the year, and that's just a massive opportunity for us to do more with that $110 billion for those members through Credit Karma.
So, this is where we really exited the year. The better and deeper integration gives us a great deal of confidence that we have the opportunity to become a big, big part of our consumers' financial lives way more than we've ever been before.
Where does generative AI fit within the discussion and consumer? And I ask for several reasons. I mean, the first is it's not lost on us the value of the datasets that Intuit has, right? We were talking about your personal story is the way that you articulated the tax returns. Intuit is also, I think you hit on this earlier too, much more technologically advanced than I think most outside of Silicon Valley realize, right? You're in Mountain View and you're generally in the leading edge in terms of leveraging new technologies. So help us paint the picture of where generative AI could come in and also assess the risks of that data being sensitive and important and personal as well.
Yeah. So that's, that's what we call a P Zero, right? Like the, the integrity of the data and the protection of the data is at the top of our list as we build products and experiences. So that's, that's a foundational element. But to your point, generative AI is only as good as the data that feeds it. And we've got incredible data on both sides of the products, right? And now they're coming together, and what that enables us to do is, in the case of Credit Karma, when you look at Intuit Assist, where it's available now, we start to use personalized information to make recommendations on what they should do. And it's, it's been deployed within Intuit, within our Credit Karma app. And in things like CK, et cetera, we see great engagement and great customer satisfaction with people that engage with that.
And it drives stickiness. On the TurboTax side, what you'll see this year, generative AI has enabled us to actually rebuild our entire product experience. And you'll see that this year. And it's going to be truly AI at the core. Now we have, we've been investing in machine learning and Knowledge Engineering for a number of years, and we've got incredible data. Now with generative AI, we're gonna have an experience that starts with data, that's much more organized around the customer situation, and guides customers through next best actions and not a full interview flow for every single customer.
And so, we deployed that in the third peak on October 15th, and saw some incredible results and very excited to roll that out, starting this week and rolling it out throughout the course of the next couple weeks where you'll see a very dramatically different TurboTax experience. It's much more customer-centric than tax form-centric.
It was a great promo. So it sounds like this is more than just like the next year of TurboTax. This sounds like a little bit more of a generational shift in the product this year.
Yeah. I like it reminds me a lot of the time of going from desktop to online, like that kind of exciting feeling of wow, this is gonna be different. It's gonna enable us to do so much more for consumers. You know, if my team were up here, you know, across Credit Karma and TurboTax, they'd tell you, you know, there's. It's palpable and we're starting to see it. That's what is exciting. We actually started to see it as we exited October 15th, which gives us more confidence heading into January as we head into tax season.
Super interesting.
Yeah.
I've asked many members of Intuit this question, over time, and it's about marketing. You maybe alluded to a little bit of this. Intuit has these brands that are each strongly recognized in one way, shape, or form. Everyone knows TurboTax as the de facto software solution. QuickBooks is dominant in accounting, but there are many users who don't even recognize that it's the same company, that it's Intuit, the sort of at the core. How do you think about that from a marketing perspective on the consumer side? You have Credit Karma, strong brand. You have TurboTax, strong brand. Or is there synergy in advertising them together? Do you think about using Intuit as more of an umbrella on top of all these things more? Or what are the kind of trade-offs you're assessing with that?
Yeah. So to your last point, there is a lot of value in the umbrella of Intuit, a ton of value in that. We've learned that over the course of the year, over the last five years really, as we've moved our cornerstone brands under the Intuit umbrella. It's really accelerated our business and our opportunities to grow markets. One, two, it's much more important for us to really right now our brands are super strong and the cornerstone, right? Credit Karma is incredibly strong and it solves a very customers go there for a very specific reason. And then TurboTax, right, a very specific reason. But what we do know is what's more important is what is the experience between the two. And that's where, that's what we learned this year.
And we did learn, because we ran some experiments, not just during tax season, but even here over the summer around a Credit Karma and TurboTax, kind of like a peanut butter and jelly kind of thing where it's go get your biggest paycheck and make it go farther. It really resonates with people. But the most important thing is we have to have seamless experiences. Customers have to be able to navigate our products, right? It's one thing to say Intuit on top. It's another thing to experience the product, and the journey. And you shouldn't feel like you're going from one product to another product. It's actually the same company and they should be able to navigate. And you'll see a lot of that through our seamless identity work, and then our data architecture and our data flows. And that's really gonna be the big unlock.
Do you think about, I mean, there have been little hints of this from time to time using the live network in some way as more of a personal finance assistant. Like, how holistically could consumer finance become for Intuit? If we were thinking much further out, five years, you're looking at the technologies you have, what are the biggest problems you could eventually help solve?
So we, to answer your question, we believe that our Virtual Expert Platform and the experts that sit on that can go much further than just taxes, for sure. We already see it in QuickBooks, right, with bookkeeping. And we also see it with payroll, with payroll expertise and bringing it there. On the consumer side, there are opportunities for us that we're exploring right now of how to extend as you think about personal loans or you think about mortgages, you think about those types of opportunities where expertise really matters. We don't have plans right now for that, but we will certainly be testing a lot.
But what we do know is that, and you asked about Intuit Assist. Intuit Assist is gonna be able to supercharge our opportunity to actually bring more and more expertise into the experience because we can equip them with information and data to make 'em very successful in serving customers. And so we do think there's an opportunity for us to expand our expert network beyond just taxes.
Okay. I think we're running lower on time. So I'm gonna leave it to you for the closing statement. And I'd like to frame it in more of the three-year perspective. Intuit, I know is always thinking multiple years in the future, but you know, your big North Star goals for the Consumer Group, the kind of the three-year milestones, the priorities that you're thinking through that hopefully we're talking about along the way over the next several years.
Yeah. So I think number one is that every TurboTax customer is a Credit Karma customer and every Credit Karma customer is a TurboTax customer, you know. That's, you know, a North Star for us. Our customers are traversing those experiences seamlessly and getting value. We're truly changing the customer's financial life beyond taxes and beyond credit and into managing money, helping 'em make better decisions about where to spend their money, and when we are a habitual use, daily use product, that's our North Star where customers can't live without us. Consumers can't live without us. I am also on the other side, thinking about how taxes can change our small businesses and help them be more efficient, deeply embedded within the QuickBooks experiences because cash flow and taxes are a big part of a small business and can trip them up a lot.
And so what we want to be able to do is take our capabilities and embed it and serve them through our QuickBooks ecosystem in a way that really helps them thrive and survive, and don't let taxes get in the way of them reaching their dreams of being a small business owner, a donut shop, landscaper, whatever it might be.
Yeah. It's a very Intuit, very optimistic note to send us off to happy hour on Mark. Very much appreciate you making the time. It was great.
I appreciate it.