Intuit Inc. (NASDAQ:INTU) Q2 2024 Earnings Call Transcript

Intuit Inc. (NASDAQ:INTU) Q2 2024 Earnings Call Transcript February 22, 2024

Intuit Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Good afternoon, my name is Angela, and I will be your conference operator. At this time I would like to welcome everyone to Intuit’s Second Quarter Fiscal Year 2024 Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer period. [Operator Instructions] With that, I’ll now turn the call over to Kim Watkins, Intuit’s Vice President of Investor Relations. Ms. Watkins?

Kim Watkins: Thanks, Angela. Good afternoon and welcome to Intuit’s second quarter fiscal 2024 conference call. I’m here with Intuit’s CEO, Sasan Goodarzi; and our CFO, Sandeep Aujla. 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 2023 and our other SEC filings. All of those documents are available on the Investor Relations page of Intuit’s website at intuit.com. We assume no obligation to update any forward-looking statements. Some of the numbers in these remarks are presented on a non-GAAP basis.

We’ve reconciled the comparable GAAP and non-GAAP numbers in today’s press release. Unless otherwise noted, all growth rates refer to the current period versus the comparable prior-year period, and the business metrics and associated growth rates refer to worldwide business metrics. A copy of our prepared remarks and supplemental financial information will be available on our website after this call ends. And with that, I’ll turn the call over to Sasan.

Sasan Goodarzi: Thanks Kim, and thanks to all of you for joining us today. We had another strong quarter and have great momentum innovating on our platform. We’re executing on our strategy to be the global AI-driven expert platform powering prosperity for consumers and small businesses. Second quarter revenue grew by 11%, and we are on track to achieve our fiscal year 2024 full year guidance of 11% to 12% revenue growth while expanding operating margins. Let’s start with tax. We are confident in our innovation and game plan to win, and are reiterating our full fiscal year guidance of 7% to 8% revenue growth for the Consumer Group. Tax preparation represents a $35 billion TAM. This includes $31 billion within the assisted consumer and business tax categories, which we have barely started to penetrate.

We are well-positioned to disrupt the assisted category by leveraging data, AI, and our Virtual Expert Platform, to revolutionize how taxes get done for consumers and small businesses. By leveraging the power of our platform and ecosystem, we’re also extending TurboTax to our Credit Karma members and QuickBooks Online small business customers by enabling them to complete their taxes and access expertise directly within these products. Let me share more about our – the areas of focus this season. First, we can serve consumers however they want to file, virtually or in-person, while providing confidence their taxes are being done accurately and they are getting their maximum refund. More than 80% of U.S. filers live within a 10 mile radius of a TurboTax expert.

These experts use Intuit’s Virtual Expert Platform that’s powered by data and AI, to deliver best-in-class service. While it’s early in the season, TurboTax Live Full Service is resonating with customers. We’re seeing strong growth and the offering has a Product Recommendation Score of 88 season-to-date, one of the highest at Intuit. Second, small businesses can file their taxes with TurboTax and, if a small business is a QuickBooks Online customer, they can file their taxes with an expert. With these offerings, they can maximize their refund, and get advice from experts when they need it. Our campaigns and easy to use experience are driving strong early interest. Business tax returns have a much higher average revenue per return because they are more complex and we expect them to contribute to average revenue per return expansion over time.

Third, we’re more deeply integrating Credit Karma and TurboTax, making it even more seamless for Credit Karma members to file with TurboTax directly in the Credit Karma app, with exclusive offers for members, whether they want to file themselves or with an expert. We’re also unlocking the benefits of the Credit Karma platform for tax filers to make smart money decisions. This includes earlier access to their refund or, for those that qualify, access to an interest-free Refund Advance loan in as little as 30 seconds after IRS acceptance, when depositing their refund into a Credit Karma Money account. This is designed to lead to higher engagement and monetization in Credit Karma over time. Fourth, Intuit Assist, our GenAI powered financial assistant, is live in TurboTax this season.

With Intuit Assist, we are creating a future of “done for you,” where the hard work is done “automagically” on behalf of our customers with a gateway to human expertise, fueling their financial success. For example, customers are using Intuit Assist to better understand their refund. In early results, Intuit Assist’s helpfulness rating is 1.5x greater than our legacy explanations, indicating Intuit Assist is helping deliver confidence to TurboTax customers. Our focus this tax season further showcases how our Big Bets have accelerated innovation and growth for the future. We’re leveraging the power of data and AI with Intuit Assist to revolutionize the speed to benefit for customers, disrupting the assisted consumer and business tax categories by connecting people with experts virtually, and bringing the TurboTax and Credit Karma experience together to unlock smart money decisions.

We are off to a great start in tax. Let me now highlight progress across two of our Big Bets. As a reminder, our five 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. Our first big bet is to “revolutionize speed to benefit.” Our platform enables us to innovate for our customers with speed and at scale, which is foundational to all of our other Big Bets. Five years ago, we declared our strategy to be an AI-driven expert platform, with data and AI fueling innovation across the platform. At the core of our platform is powerful, relevant data for our 100 million customers. We have 500,000 customer and financial attributes per small business, and 60,000 financial and tax attributes per consumer which fuels what’s possible with AI.

And with our GenAI Operating System, GenOS, we empower Intuit technologists to create breakthrough GenAI experiences across our platform. This includes utilizing our own powerful financial LLMs, as well as those from other leaders in GenAI, which together unlock new opportunities to serve our customers with accuracy and speed in a cost efficient way. As I mentioned earlier, with Intuit Assist, we are creating a future of “done for you,” where the hard work is done “automagically” on behalf of our customers with a gateway to human expertise, fueling their success. Intuit Assist is critical to delivering unparalleled benefits for our customers over the next decade, and is in the hands of select customers now. We believe Intuit Assist will lead to higher frequency of engagement and monetization across the platform, driving customer growth, accelerated adoption of services and live offerings.

I’m excited about the rapid pace at which we are innovating, testing, learning, and adapting to deliver our core benefits of more money, no work and complete confidence for customers. Let me share a few updates. First TurboTax, as I shared earlier, Intuit Assist is live in the product this season and is delivering increased confidence to our customers. Second, Mailchimp, to help small businesses grow revenue and save them time, we’re providing AI-powered automations and content generation using Intuit Assist. Third, QuickBooks, Intuit Assist is in beta and is designed to help small businesses optimize cash flow and make confident decisions to grow their business. New customers who were previously running their business manually will be able to get started quickly by sharing their email, website and bank account information.

Their unstructured data will be translated into benefits for them, such as generating customized pay-enabled invoices that save time and enable customers to get paid faster, experiencing the benefits of switching to a digital platform. And for existing customers, we will translate their data and analyze their money in and money out transactions into insights and recommendations. Intuit Assist will do the work for our customers in the background with suggested automated actions that increases customer productivity by saving time and leading to better outcomes such as getting paid faster and updating capital. Furthermore, we intend to provide an option to connect and interact with an expert to help provide insights and make decisions specific to their financial situation and fuel their success at the moments that matter most, such as closing their books.

Fourth, Credit Karma, Intuit Assist for Credit Karma is in beta and we’re excited about the rapid innovation and the progress we’re making to help connect members to financial products that are right for them, saving them time and money. We’re focused on using GenAI to interact with members to help answer their questions in a highly personalized way when shopping for financial products. Customers can interact, learn more, and ask questions to help make confident decisions. Intuit Assist will engage more members with a wide range of financial needs beyond Credit. We recently expanded by 6x the number of topics we can provide help on and now address items like major purchases, home buying, savings, and more. We believe this can drive increased member engagement and conversion, and drive higher revenue per monthly active user.

We remain excited with our early progress with Intuit Assist across the company. It’s changing our relationship with customers as we move from being a transactional workflow platform to a trusted assistant that customers can rely on daily to power their prosperity. Our fourth big bet is to become the center of small business growth by helping our customers get new customers, get paid fast, manage capital, and pay employees with confidence in an omnichannel world. We are well on our way to becoming the source of truth for our customers to help them grow and run their business. In Mailchimp, we’re focused on better serving mid market customers across different stages of their lifecycle to drive higher engagement and retention. After we have successfully onboarded them, we’re pairing larger customers with an account manager to help them understand and adopt the breadth of Mailchimp’s capabilities.

We’re seeing green shoots from account management, which gives us confidence in the future. Customers who have engaged with an account manager have higher monthly revenue retention. We believe this will also drive higher ARPC over time. Intuit Assist is live in Mailchimp’s higher end offerings and is designed to help customers develop personalized marketing campaigns and drive their revenue growth. We’re offering customers three AI-powered automations today, including new customer welcome, abandoned shopping cart and recovering lost customers. Automations are time consuming to set up, but can drive higher revenue. Intuit Assist personalized automations are 50% more likely to be activated by customers. Intuit Assist is also reducing work by generating new content and editing existing content for marketing campaigns.

Recent improvements have driven GenAI text generation adoption rates by more than 70% over the past several months, reducing work for our customers. Getting paid fast remains a big challenge for small businesses. We are uniquely positioned to help customers with our end-to-end money platform and innovations such as easy discovery, auto-enabled payments, payment-enabled invoices, instant deposit and get paid up front, which are all helping our customers get paid faster and drive adoption of payments. Total online payment volume growth was 20% in the quarter. We are beginning to roll out a new payment-enabled invoicing experience that will provide more benefits to customers, including more ways to get paid. While early, we’re seeing that customers who use the new invoicing experience are engaging more driving increase in customer adoption of our payment rails to get their invoices paid.

We’re also making progress digitizing B2B payments to accelerate and automate transactions between small businesses and ultimately improve their cash flow. The number of connections in our QuickBooks business network has doubled since August, and we’re pleased with the initial adoption of our bill pay offering. To better serve small businesses, during the quarter, we began rolling out faster payment timelines for qualified customers that reduce payment time by 40%, including a paid next-day ACH option and batch payments, allowing customers to hold on to their cash longer and save time. Wrapping up, with our durable AI-driven expert platform strategy and focus on innovating with GenAI across our platform, we are more excited than ever about the opportunity in front of us, and our ability to power prosperity for our customers.

We’re honored to be recognized by Bloomberg as one of the top 50 Companies to Watch in 2024 and to be ranked 22 on this year’s Just 100, and the highest ranked customer or software company on the list. Now let me hand it over to Sandeep.

Sandeep Aujla: Thanks, Sasan. For the second quarter of fiscal 2024 we delivered another strong quarter, despite the IRS opening approximately one week later this year. We achieved healthy operating margins and are on track to achieve our full year guidance as we continue to deliver operating leverage across the business. Our Q2 results include revenue of $3.4 billion, up 11%, GAAP operating income of $369 million versus $270 million last year, up 37%. Non-GAAP operating income of $1 billion versus $856 million last year, up 17%. GAAP diluted earnings per share of $1.25 versus $0.60 a year ago and non-GAAP diluted earnings per share of $2.63 versus $2.20 last year, up 20%. Turning to our business segments. Small Business and Self-Employed Group revenue grew 18% during the quarter, driven by online ecosystem revenue, which grew 21%.

Our results continue to demonstrate the power of our small business platform and the mission-critical nature of our offerings, which resonates with customers as they look to grow their business and improve cash flow in any economic environment. With the goal of being the source of truth for small businesses, our strategic focus within the small business and self-employed group 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 19% in Q2, driven mainly by customer growth, higher effective prices and mix shift. We continue to prioritize disrupting the small business mid-market through continued focus on both go-to-market and product innovations.

While mid-market customers are a smaller subset of the total small business TAM, they drive a higher ARPC over time given their more complex needs and higher usage of services across our platform. This coupled with our strategy to sell more of our ecosystem services to existing customers, shift the emphasis in our growth formula towards ARPC over time. Second, we continue to focus on connecting the ecosystem. Online services revenue grew 24% in Q2, driven by payroll, payments, Mailchimp, capital and time tracking. Within payroll, revenue growth in the quarter reflects an increase in customers adopting our payroll solutions, higher effective prices and a mix shift towards higher end offerings. Within payments, the revenue growth in the quarter reflects ongoing customer growth as more customers adopt our payment offerings to manage their cash flow, higher effective prices and an increase in total payment volume per customer.

Mailchimp revenue growth was driven by higher effective prices and paid customer growth. Third, we continue to make progress expanding globally by executing a refreshed international strategy, which includes leading with both QuickBooks Online and Mailchimp in our established markets and leading with Mailchimp in all other markets as we continue to execute on localized product and lineup. On a constant currency basis, total international online ecosystem revenue grew 16% in Q2. Now moving to our Desktop Ecosystem. Desktop Ecosystem revenue grew 10% in the second quarter, and QuickBooks Desktop Enterprise revenue grew in the mid-teens. We are more than two years into a three-year transition for customers that remain on a license-based desktop offering to a recurring subscription model.

In fiscal 2025, the tailwinds from the three-year transition will be behind us, but we expect our Desktop Enterprise offering, which accounts for over half of desktop accounting revenue to grow in the high single-digit range. We also will continue to encourage remaining desktops subscription customers who tend to be more complex and higher value to migrate seamlessly to either QuickBooks Online or our desktop enterprise offering when they are ready. Additionally, we see opportunities to continue to price the product for value. The online ecosystem remains a growth catalyst longer term. Shifting to our Consumer and ProTax Groups. Our full year outlook remains unchanged, even though Consumer Group revenue declined 5% in the quarter, reflecting an approximately one week later IRS opened this year.

We are confident in our game plan to win this season and are reiterating our guidance for Consumer Group of 7% to 8% revenue growth in fiscal 2024. Turning to the ProTax Group, the revenue grew 8% to $274 million in Q2, reflecting the timing of when tax forms were delivered, which is a driver for revenue recognition. Moving to Credit Karma. Credit Karma delivered revenue of $375 million in Q2, flat to a year ago, primarily reflecting growth in Credit Karma Money, credit cards and auto loans offset by decline in home loans, personal loans and auto insurance. We saw select partners taking a conservative approach to extending credit in both personal loans and credit cards in Q2, reflecting expected macro trends. And as a reminder, Q2 is typically the seasonally weakest quarter of the year.

We expect Q3 to benefit from additional Credit Karma Money revenue during tax season. In summary, I am pleased with our continued momentum this fiscal year. Now shifting to our balance sheet and capital allocation. Our financial principles guide our decisions. They remain our long-term commitment and are unchanged. We finished the quarter with $1.5 billion in cash and investments and $6 billion in debt on our balance sheet. We repurchased $536 million of stock during the second quarter. Depending on our market conditions and other factors, our aim is to be in the market each quarter. The Board approved a quarterly dividend of $0.90 per share, payable on April 18, 2024. This represents a 15% increase versus last year. Moving on to guidance. We are reaffirming our fiscal 2024 guidance.

This includes total company revenue growth of 11% to 12% and GAAP operating income growth of 15% to 18%; non-GAAP operating income growth of 12% to 14%. GAAP earnings per share growth of 11% to 15% and non-GAAP earnings per share growth of 12% to 14%. Our guidance for the third quarter of fiscal 2024 includes revenue growth of 10% to 11%, GAAP earnings per share of $7.77 to $7.84, and non-GAAP earnings per share of $9.31 to $9.38. As a reminder, we are taking a prudent approach with guidance given the continued macroeconomic uncertainty. You can find our full year fiscal 2024 and Q3 guidance details in our press release and on our fact sheet. With that, I’ll turn it back over to Sasan.

Sasan Goodarzi: Great. Thank you, Sandeep. And just to quickly wrap up, we’re very confident in our AI-driven expert platform strategy, our progress with our five big bets, and creating a future of done for you with a gateway to human expertise. We believe that this will change our relationship with our customers, becoming their trusted advisors, leading to higher engagement and monetization. The combination of our assets and our strategy creates a growth flywheel for Intuit to accelerate penetrating our $300 billion in TAM. With that, let’s open it up to your questions.

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Q&A Session

Operator: Thank you. [Operator Instructions] Our first question comes from Siti Panigrahi with Mizuho. Please go ahead.

Siti Panigrahi: Thank you. Thanks for taking my question. Sasan and Sandeep, I want to dig into the health of the small business. Just two part question, on the online accounting system, revenue seems to be in line, our expectation site to decel. Is there any one-time factor that influenced and how should you think about second half, given that’s an easy comp? And other part is on the services, while we’re pleasantly surprised, it’s accelerated. And you talked about some of this payroll payments and Mailchimp. Is there anything like you are doing differently, specifically drilling into the Mailchimp, how is that part of the business doing?

Sasan Goodarzi: Yes, Siti, thank you for your question. Maybe I’ll start us off. And Sandeep, please jump in as you wish. I mean as the headline that I would give Siti is that we’re really pleased with the momentum that we have, the growth that we’ve experienced. When you think about it in context of the current macro environment, we’re continuing to see larger, higher value customers, mid market customers want to shift to digitization. And the more we spend time with them, with our account managers, with our sales folks, with our customer success folks, they tend to have a tendency of wanting to move more of their services to us because for the most part, we are already the standard of financial management solutions that they use for their financial records.

But they see it as an opportunity to get paid faster, manage their workforce to be able to use our capabilities, to be able to market to their customers. And so the net of it that I would leave you with is I like our momentum in this macro environment. We expect that to continue for the rest of the year. And there’s a lot of puts and takes in our online accounting and online services. And so I wouldn’t read anything into it. The most important element to take away is the 21% overall online growth. And our services are strong and we continue to innovate with our services. And I expect that we’ll continue to lead digitization and transformation for our small businesses. Sandeep, I don’t know if you want to add anything, but those would be the headlines for me, Siti.

Sandeep Aujla: Yes. Sasan, good coverage [ph]. Siti, what I would also remind you of is, as we’ve shared in the past, there are three imperatives that you focus on as a management team, new customer acquisition, driving adoption of our platform and being better together across our platform. And with that in new customer acquisition, our team continues to focus on mid-market customers. As you call those mid-market customers, they’re a larger, richer revenue pool. They have higher customer acquisition costs, but they also take a little longer to ramp up because most of the size of the price in those mid-market customers on services revenue, which ramps up as opposed to accounting, which you start booking as soon as they become a customer, so just a dynamic to keep in mind.

That’s why in my prepared remarks, I called out that our growth formula will continue to start leaning more towards ARPC going forward. And the second component of the services is basically us executing on our focus of driving adoption of our platform.

Siti Panigrahi: Thanks. Great execution, guys.

Sasan Goodarzi: Thank you.

Operator: The next question comes from Kash Rangan with Goldman Sachs.

Kash Rangan: Hi, congratulations to Sasan and Sandeep. Really good call here. I’m wondering if you can give us an update on what’s happening in the SMB market. Looks like enterprise spending seems to be stabilizing. I know that you’re not really enterprise except for QuickBooks Advanced, but how did you characterize the outlook for small businesses given that the economy is on stable footing and we don’t have the worries that we had going into calendar 2022? Thank you so much once again.

Sasan Goodarzi: Kash, great to hear from you. Great question. I would – let me categorize the answer in two buckets. First of all, facts are friendly, and let me start with some facts. What we see across our base is that cash reserves are down 11% year-over-year. That’s really what small businesses care about. But it’s actually up 115% over pre-pandemic levels. And so the takeaway you should have in that is small businesses are being challenged in this macro environment. Consumers are spending less dollars, but they’re actually healthier at the aggregate level than they were several years ago. In fact, what I would call out is the number of hours worked is higher this year, several points compared to last year. So that just the strength of the work that they’re doing, being able to have access to talent is in a better position for small businesses compared to last year.

And that, by the way, as you can imagine differs by country and by sector, sectors like real estate, IT spending is struggling if the sector small business is in, but things like professional services, auto repairs is actually quite healthy. Last thing I would end with is the higher value customers more the mid-market customers are healthier than those that are small and just starting out, which by the way, we’ve seen this in our 20 plus years, right, we’ve seen this is a normal trend whereby the larger businesses have a lot more levers to be able to pull and they’re generally healthier. Lastly, our view, and we’re not economists, but we see a lot of data. Our view is that 2024 is going to be a lot of the same for small businesses. We don’t believe that there’s going to be any kind of an economic tailwind as we think about the next – the rest of the calendar year.

Kash Rangan: Thank you so much.

Sasan Goodarzi: Yes. You’re very welcome.

Operator: The next question comes from Brad Zelnick with Deutsche Bank.

Brad Zelnick: Great. Thank you so much and nice job in Q2. Maybe a tax question, just with the slower start to the season, Sasan, and we appreciate every season is more and more backend loaded, but can you talk about what it is that you’re seeing in the funnel and anything else that supports your confidence in the full year consumer guide? Thanks.

Sasan Goodarzi: Yes. Sure, Brad. First of all, I’ll amplify what you started out with. Having been in the tax business and ran it more than ten years ago and watching our trends in the last ten years. Every season there’s a push to a later start, and it’s just a consumer behavior, and we’re seeing that this year, so that’s not anything unique. There’s two things that I would call out that are strategic to us, that are worth calling out, because we see green shoots in both with the early part of season. One is full service. Just as a refresher, there’s nearly 100 million consumers and small businesses that spend about $30 billion to have somebody else do their taxes for them. And we really leaned into our overall full service experience, we really leaned into our campaigns, both on air, digital.

Very basic things, by the way, that we didn’t used to have the capabilities of that we’re now building, which is if you use an expert and you love that expert, that you can recommend that expert to a friend, that, that’s basics. But the infrastructure that we’re building to really disrupt the full service space is a necessity. And we feel very good about the green shoots that we’re seeing, both on the consumer front and on the business tax front. And I’ll remind you that this is our first year leaning all the way into business tax. So it’s beyond early, but everything that we’ve seen just indicates that this is enormous opportunity for us. So that’s on the full service front. The second I would mention is Credit Karma. This is really an area where we have nearly 45 million monthly active users.

They engage more than five times a month, and the majority of those monthly active users actually use a different method and not TurboTax. And so we’ve really heavily invested in the experience, whether you want to do it yourself in the app or you want us to do it for you, which is full service and compelling offerings that we’ve been testing and scaling. And we also like the green shoots there. So those are the two things that I would call out, and it really positions us for share of spend. I’ll end with the following, which is we’ve set the goal line in taxes, our share of total IRS returns, and really what matters is the share of spend that we’re getting. And full service is essential for that, both this year and in the future.

Brad Zelnick: Thanks, Sasan. Great color, and keep up the good work. Thank you.

Sasan Goodarzi: Thank you, Brad.

Operator: The next question comes from Michael Turrin with Wells Fargo.

Michael Turrin: Hey, great. Good afternoon. Appreciate you taking the question. I was hoping we could go back to the mix of online services, and maybe you could just help us compare and contrast in more detail what you’re seeing from a growth perspective across the payroll payments and Mailchimp business? And is there a float aspect at all to the payroll portion of the business that might be helping reinforce some of the margin strength you’re seeing? Given headwinds from the slower start to tax? I think a lot of focus on just the EPS strength in the quarter. Thank you.

Sasan Goodarzi: Sure. Do you mind repeating the last part of your question?

Michael Turrin: Yes. Just wondering if there’s at all on the payroll side a flow component that might be also just softly helping margin outside of the consumer headwinds you’re seeing.

Sasan Goodarzi: Yes. Let me start with the overall services question that you asked and Sandeep will weigh in here with some of the facts that you asked around flow. I think the thing that I would just say around services goes back to my earlier comment, which is we’re just spending a lot more time with higher value customers really helping them understand what we can do to digitize their businesses, and by the way, continuing to improve our offerings. And so as we talked about earlier, our total online payments growth this quarter was 20% in a fairly tough macro environment. That’s because we continue to invest in making the experience easier, providing multiple methods to get paid instant deposit, getting paid upfront.

So those really help with, in essence, payments adoption. Our payroll adoption has been strong, particularly larger customers and with full service, and we’re continuing to really invest in some of the most important foundational elements with Mailchimp that higher value customers are adopting, and particularly some of the things that I called out with intuitive. So it’s really – it’s not one thing, it’s a combination of all of our services and the focus on higher value customers that is really helping us with some of the services adoption. Maybe. Sandeep, I’ll turn it over to you on the float and anything else you want to add.

Sandeep Aujla: Sure. So thanks, Sasan. Michael, the float component is a very small part of our payroll business, as one thing that we really aim to do for our small businesses is to hold their cash as little as possible. So float is not a big component for us. And I think the overarching theme of your question was the ability for Intuit to preserve the earnings power of the company despite the one week delay in the IRS opening. I think Sasan touched on that. And it’s also some of the great work that the team has been doing around acquiring larger customers around the lineup, work we did to make the higher end SKUs in payroll more attractive to those customers. The work the team is doing around mid market account management and Mailchimp. So it’s a plethora of activities that continues to give us confidence across portfolio of assets that we have here at Intuit.

Michael Turrin: Appreciate the details there. Thank you.

Sasan Goodarzi: Thank you, Michael.

Operator: The next question comes from Taylor McGinnis with UBS.

Taylor McGinnis: Yes, hi. Thanks so much for taking my question. Maybe another one on online services. So if I heard you correctly earlier, it sounds like you guys are expecting a more stable macro environment as we move throughout the year. So can you just talk about what that means for the durability of the acceleration in online services that we just saw to 24% year-over-year? Could you actually see online services hang in here at these levels? Was there anything one-time in nature? And just curious, as the macro remains more challenging, how the pricing lever could be used there to help you guys during this time? Thanks so much.

Sasan Goodarzi: Yes, sure. Taylor, let me add a few things if I could. First of all, I’ll start with we don’t view the macro environment as entirely remaining stable. We think it’s going to continue to be uncertain. So we’re not sort of banking on any of our growth coming from any type of a tailwind from the macro environment. We think 2024 will be somewhat choppy, like 2023 was from a macro environment perspective. And we see it in the consumer – credit scores of consumers. As you know, we see over 100 million members across Credit Karma. And their credit scores in the last couple of years are down almost 20 points. Gen Z credit card balances are up over 60% and those are just a couple of illustrative examples that consumers are strained.

So the first uber-point would be that we think the environment is stable to uncertain and we’re not trying to outguess the economy, but really focus on our customers and our innovation, which gets to the second point, and that is we have confidence in the guidance that we provided of the 16% to 17% for the year, even in context of the macro environment, just because we continue to really emphasize and focus with our high value mid-market customers digitization. And that’s really what’s leading to our overall 21% online growth that we talked about. And that’s what gives us confidence in our guidance. And really, as we look into the future, our entire focus is really all about our innovation and our go-to-market to win, despite the tough economic environment.