Good afternoon, my name is Raiza, and I'll be your conference operator. At this time, I would like to welcome everyone to Intuit's Fourth Quarter Fiscal Year 2023 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?

Thanks, Raiza. Good afternoon and welcome to Intuit’s fourth-quarter fiscal 2023 conference call. I’m here with Intuit's CEO, Sasan Goodarzi, and our new CFO, Sandeep Aujla. Welcome, Sandeep, it's nice to have you on the call. 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 2022, and our other SEC filings. All of these 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. With that, I'll turn the call over to Sasan.

All right. Excellent, Kim, thank you, and thank you, everybody, for joining us today. We had a very strong fourth quarter as we executed on our strategy to be the global AI-driven expert platform, powering prosperity for consumers and small businesses. We grew full year revenue 13%, delivered strong operating margin expansion, and exited the year with momentum. Our overall performance demonstrates the strength of our platform and the diversity of our portfolio, including our ability to maintain earnings power in uncertain times. This past year, we expanded our operating margin again, while investing in the most important areas to drive durable long-term growth. We are guiding to another year of double-digit revenue growth and margin expansion in fiscal year 2024, even with the macroeconomic environment that is uncertain. We are entering Intuit's most exciting area. Five years ago, we declared our strategy to be an AI-driven expert platform with data and AI core fueling innovation across our five Big Bets. We've made strong progress in transforming from a tax and accounting platform where consumers and small businesses have to do the work to achieve the benefit that they are seeking, to a global financial platform, where we do the hard work for them. Now, we are creating a future of, done for you, a future where the hard work is done automatically on behalf of our customers to fuel their financial success. This future is only possible because of our history of significant investments in our platform, talent, data and AI and now our accelerated investments in generative AI. At the core of our platform is powerful, relevant data. Intuit has incredibly rich longitudinal, transactional and behavioral data for 100 million customers. For small businesses, we have a 360-degree view of their business and customers. We have 500,000 customers and financial attributes per small business on our platform and this data gives us insights into behaviors, income streams, expenses, profitability, and cash flows, enabling us to provide personalized experiences and recommendations to help them prosper. Additionally, we have 60,000 financial and tax attributes per consumer on our platform, including income, expenses, credit history, spending history, outstanding loans, cash flow, and tax information, which enables us to become a financial assistant in their pocket. We are using our data to fine-tune our own financial large language models that specialize in solving tax, accounting, cash flow, marketing, and personal finance challenges. The investments that we've made in data and AI over the years allow us to introduce innovations at an accelerated rate. Intuit's rich data platform is a powerful foundation that allows us to create innovative AI-assisted experiences for all of our customers powering their prosperity. In June, we introduced our generative AI operating system called GenOS, to ignite innovation at scale for the benefit of millions of consumers and small businesses. GenOS empowers Intuit technologists to create breakthrough generative AI experiences. We are using a platform approach, giving our teams across Intuit the resources and tools they need to design, build, test and deploy these new experiences with unparalleled speed. This includes our own powerful financial LLMs, as well as those from other leaders in GenAI, which together unlock new opportunities to serve our customers, in a cost-effective way. We are entering Intuit’s most exciting era yet and believe the next several years will be game changing. On September 6th, we’ll be hosting Intuit Innovation Day, a virtual event where we will unveil exciting GenAI innovation across our platform and how it will drive business growth in the years ahead. We look forward to sharing more with you then. Now, let me turn to our Big Bets which are driving growth and benefits for our customers today. I would like to highlight some examples of recent progress in one 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 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. In payments, our innovation continues to drive digitization, from creating an estimate, to invoicing a customer, to getting paid. Today, easier discovery, auto-enabled payments, instant deposit, and getting paid upfront, are all helping drive adoption of our payments offering, leading to 22% total online payment volume growth this quarter. We are making significant progress digitizing B2B payments to accelerate and automate transactions between small businesses, and ultimately improve their cash flow. We see a tremendous opportunity as 80% of businesses still pay other firms via paper checks. We recently expanded the availability of the beta of our native bill pay solution by 10x. Turning to Mailchimp, 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, delivering on our vision of an end-to-end QuickBooks and Mailchimp customer growth platform. Second, disrupting the mid-market by developing a full marketing automation, CRM and eCommerce suite. And third, accelerating global growth with a holistic go-to-market approach. This last quarter, we implemented our first generative AI capability in Mailchimp, the Email Content Generator, enabling customers to create faster email campaigns based on industry, marketing intent and brand voice. This quarter, we launched the beta of a new product announcement generator, which uses AI to automatically create an email that a small business can send to its customers. We also announced over 150 new and updated features at our recent Mailchimp conference in London, designed to support the needs of advanced marketers, including a calendar view, custom reporting and analytics, more e-commerce advanced segmentation, more real time behavioral data based on e-commerce automations, and SMS marketing. Lineup changes and free trials are driving positive trends in year-over-year paid customer growth, which accelerated this quarter. We continue to make progress in mid-market, our 90-day retention rate this quarter the highest it’s been in two years. We have also translated the product into five different languages. We will share more on the outcomes we’re delivering across our five Big Bets at our Investor Day. Wrapping up, with our durable AI-driven expert platform strategy and focus on innovating with GenAI across our products, we are moving at high velocity. This will help us put more money in our customers’ pockets, save them time, and ensure complete confidence in every financial decision they make. As we lead this next technological shift, we are well positioned to power prosperity for our customers and communities that we serve with a leadership team that is built for the era of AI. Now let me hand it over to Sandeep. It’s great to have you on the call, my friend.

Thank you, Sasan. I'm excited to be here and I look forward to meeting many of you in the future. We delivered strong results in fiscal 2023, including total revenue growth of 13%, strong margin expansion, and GAAP and non-GAAP EPS growth of 15% and 22% respectively. For the fourth quarter of fiscal '23, we delivered results that exceeded the high-end of our guidance range across all key metrics, including revenue of $2.7 billion, up 12%. GAAP operating income of $17 million versus a loss of $75 million last year. Non-GAAP operating income of $627 million versus $433 million last year up 45%. GAAP-diluted earnings per share of $0.32 versus a loss of $0.20 a year ago and non-GAAP diluted earnings per share of $1.65 versus $1.10 last year, up 50%. Now turning to the business segments. In the Small Business and Self-Employed Group revenue grew 21% during the quarter and 24% for the full year, which included four points of benefit from a full year of Mailchimp's revenue this year versus three quarters last year. Online ecosystem revenue grew 21% during the quarter and 30% for the full year. With the goal of being the source of truth for small businesses, our strategic focus within the Small Business and Self-Employed Group is three-fold, grow the core, connect the ecosystem and expand globally. First, we continue to focus on growing the core. QuickBooks Online accounting revenue grew 22% in Q4 and 26% in fiscal '23. Growth for the quarter and fiscal year were driven mainly by customer growth, higher effective prices and mix shifts. Second, we continue to focus on connecting the ecosystem. Online services grew 20% in Q4 driven by payroll, Mailchimp, payments, capital and time tracking. For the full fiscal year, '23 QuickBooks Online Services grew 34% driven by Mailchimp, payroll, payments, capital and time tracking. Within payroll, revenue growth in this quarter reflects an increase in customers' adopting our payroll solutions and a mix shift towards higher-end offerings. Mailchimp revenue grew mid-teens in Q4. Growth was driven by higher effective prices and paying customer growth. Within payments, revenue growth in the quarter reflects ongoing customer growth as more customers adopt our payments offering to manage their cash flow as well as an increase in total payment volume per customer. Third, we continue to make progress expanding globally by executing our 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 12% in Q4 and 31% in fiscal '23. The power of our small business platform continues to resonate with customers as they look to grow their business and improve cash flow across all types of economic environments. Our platform remains critical to our customers' success and we continue to see them adopt multiple offerings across the platform to manage their business. Desktop Ecosystem revenue grew 19% in the fourth quarter and QuickBooks Desktop Enterprise revenue grew in the low 20s. We are approximately two-thirds of the way through a three-year transition for customers that remained on license-based desktop offering to a recurring subscription model. We also raised our desktop prices across multiple products last September, consistent with our principle to price for value. Looking ahead, we expect continued strong desktop ecosystem revenue growth next year as we complete the remaining part of the three-year transition. Our focus is to continue building out our online ecosystem and to help our desktop customers migrate seamlessly to our online offerings. We continue to expect the online ecosystem to be our growth catalyst longer-term. Looking ahead, we continue to anticipate Small Business and Self-Employed revenue growth of 15% to 20% per year in long term. Now shifting to Credit Karma. Credit Karma delivered revenue of $424 million in Q4, down 11%. On a product basis, the decline in Q4 was driven primarily by macroeconomic headwinds in personal loans, auto insurance, home loans and auto loans, partially offset by growth in credit cards and Credit Karma Money. Full year revenue was $1.6 billion down 9%. Credit Karma represented 11% of Intuit's total revenue in fiscal '23. We have seen continued stability across our core verticals, which led to the improvement in year-over-year performance during Q4 versus Q3. For context, credit cards and personal loans represented nearly 50% and nearly 30% of Credit Karma’s revenue in fiscal '23, respectively. Looking ahead, we continue to anticipate Credit Karma annual revenue growth of 20% to 25% per year long term. Now shifting to Consumer and ProTax groups. Consumer Group revenue was $4.1 billion in fiscal '23, up 6%. Each tax season has been unique since the pandemic began four years ago, introducing volatility into Consumer Group results. However, average annual trends over this four-year period are more in line with the long-term trends. Over the past four years, Consumer Group revenue increased by an average of 10% annually, which aligns with our long-term growth expectations of 8% to 12%. While this was a unique tax season, I am proud of the progress the team made by transforming the assisted segment with TurboTax Live, which grew revenues 17% this year, while customers grew 12%. Looking ahead, we are confident in multiple growth drivers. First, we see a large runway ahead of us with TurboTax Live, given our ability to use both GenAI and human experts powered by AI to deliver confidence for our customers. We are investing in scaling our full-service offering, which has a good product market fit based on the highest product recommendation scores of any product at Intuit this year. Second, we are trying to scale our business tax offering, following a successful pilot this year. And third, we see significant opportunities ahead, driving Credit Karma members to TurboTax and giving TurboTax filers faster access to their money with Credit Karma Money. Given the growth opportunities I just shared, we continue to expect annual Consumer Group revenue growth of 8% to 12% per year over the long term. Turning to the ProTax Group, revenue was $561 million in fiscal '23, up 3%. Now let me share more on our financial principles and capital allocation. Our financial principles guide our decisions, remain our long-term commitment and are unchanged. We finished the quarter with approximately $3.7 billion in cash and investments and $6.1 billion in debt on our balance sheet. Approximately $4.2 billion of the debt is maturing over the next 15 months and we are evaluating refinancing opportunities subject to market and other conditions. We repurchased $465 million of stock during the fourth quarter and $2 billion during fiscal '23. Depending on market conditions and other factors, our aim to be -- is to be in the market each quarter. The Board approved a quarterly dividend of $0.90 per share payable on October 17, 2023. This represents a 15% increase versus last year. We recently finalized our three and one year strategic plan. I feel confident in the investments we are making to drive durable growth, including executing across our Big Bet and continuing the accelerated pace of innovation, particularly with GenAI. We have a proven playbook for operating in both good and difficult economic times. We manage for the short and the long-term and control discretionary spend to deliver strong results while investing in what is most important for future growth. Our goal remains for Intuit to emerge from this period of macroeconomic uncertainty in a position of strength. Moving on to guidance. Our fiscal 2024 guidance includes total company revenue of $15.89 billion to $16.105 billion, a growth of 11% to 12%. Our guidance includes revenue growth of 16% to 17% for the Small Business and Self-Employed Group, 7% to 8% for the Consumer Group, and a decline of 3% to a growth of 3% for Credit Karma. GAAP earnings per share of $9.37 to $9.67, growth of 11% to 15%, and non-GAAP earnings per share of $16.17 to $16.47 growth of 12% to 14%. We expect a GAAP tax rate of approximately 23% in fiscal 2024. Our guidance for the first quarter of fiscal '24 includes revenue growth of 10% to 11%, GAAP earnings per share of $0.15 to $0.21, and non-GAAP earnings per share of $1.94 to $2. We are taking a prudent approach with guidance given the continued macroeconomic uncertainty. As a reminder, in Q1 of fiscal '24, we expect to pay approximately $700 million in cash tax payments related to fiscal '23, which were deferred due to the IRS disaster-area tax relief. You can find a full fiscal 2024 and Q1 guidance details in our press release as well as on our fact sheet. With that, I'll turn it back over to you, Sasan.

Great. Thank you. And wrapping up, we are confident in our AI-driven expert platform strategy and progress with our five Big Bets, the investments that we are making in GenAI and our leadership team driving our platform innovation. The combination of our assets and our strategy creates a growth flywheel for Intuit to accelerate penetrating our $300 billion in TAM. In today's uncertain macro-environment, the benefits of our global financial technology platform are more important and mission-critical than ever to our customers. I look forward to your attendance at our Intuit Innovation Day on September 6th, and Investor Day on September 28th. With that, let's open it up to your questions.

[Operator Instructions] And we'll take our first question from Keith Weiss with Morgan Stanley. Your line is open.

Excellent. Thank you guys for taking the question, and a really nice quarter, and nice to see a forward EPS guide ahead kind of where consensus was to see those numbers start moving up. My inbox getting filled up with questions about the consumer business and the consumer guide. You've talked about a longer-term 8% to 12% growth there, the four-year CAGR of 10%, but this year you are looking for 7% to 8%, so below that guidance framework. And I think what people are trying to understand is why that is? Last year was a difficult tax season. Did you pull the levers too hard on pricing? Or what was it, do we need to refill the tank in terms of units like? What is it that's going to keep this tax season to be underperforming those longer-term targets? Thank you.

Hey, Keith, thank you for your question. Let me give you the headline, but allow me to unpack it. I think the headline is we are just simply being prudent. Our focus on future growth and our bullishness does not change at all. Let me unpack that. First and foremost, when you look at the assisted segment, there is a $30 billion TAM, and $20 billion of it is consumer-assisted segment and $10 billion of it is business segment. And the second is the secular shift towards digitization will continue and only accelerate in the years to come. And with that as context, we probably saw some of our biggest green shoots this year, which is why we are probably more bullish about what's possible in this business than we were even three to four years ago, and I would put it in two buckets, Credit Karma and then the assisted segment. In Credit Karma, just as a reminder, our vision from the moment that we bought Credit Karma was to create one consumer platform where a consumer can manage their financial lives, manage their money, and get their taxes done in one place. After several years of just rapid experimentation, we had a massive breakthrough this past year where our customer growth within the Credit Karma platform versus a number of Credit Karma members who became TurboTax customers was up 5x and we are scaling that both on the product side and on the business model side as that gives us a lot of confidence going into next year and beyond. The second is going to be assisted segment and that's in three parts. First and foremost is we actually had product market fit this past year at full service, our biggest focus was how do we scale. We had some breakthroughs in how to scale. In fact, as you heard from Sandeep, we had our best product recommendations score of any product across the company and we are significantly leaning into that in the coming year. The second is business tax. We launched and learned to get the product market fit in business tax. That is not going to be available, both across our QuickBooks Live platform and directly going to market with TurboTax and we have hundreds of thousands, if not millions of people, will come to TurboTax looking for business tax. We've never had an offering. We will next year and we are scaling it. The last thing, I would say in the assisted segment, one of the biggest things that we've learned in the last year is local matters. What that means, people will go on Google, and they will search, if I'm in San Diego is there a pro close to me, while we've never been good been found and local and in fact, when you look at the experts that we have, we are 10 miles from every home in household in the United States and so we're going big on local this year. And so when I look at our green shoots in the assisted segment and in Credit Karma, it gives us a lot of confidence as we look at this coming year and the future and I'll end with where I started, was the essence of your question about our guidance, we're simply being prudent given the year that we just had.

Excellent. That’s it for me. Thank you.

Thank you.

And we'll take our next question from Siti Panigrahi with Mizuho. Your line is open.

Thank you. Great quarter and Sandeep, congratulations on your first earnings call and looking forward to working with you. Sasan, I want to ask about your bill pay, what sort of feedback have you been getting from your beta customer from the QuickBooks native bill pay? And how should we think about the near-term opportunity as you're switching the legacy powered by payment solution with now your native bill pay? And then on the broader vision side on small business, now that you have full end-to-end cash flow management, now you have AR invoice payment and AP bill pay, then you have money bank accounts. So what is your broader vision in terms of that monetizing the whole ecosystem?

Yeah, Siti, thank you for your question. Let me take it in two parts. First and foremost, you've heard us in the past year plus talk about digitizing B2B with respect to all of the manual work that gets done today in terms of 80% of the back and forth between small businesses is all sort of paper checks and manual. And our goal has been to digitize all of that. And one last element of what we needed to do was to launch bill pay. I think the headline I would just give is -- the feedback we've been getting has even gone better than what we thought, and we're now at a place where we are 10x-ing our beta, and we hope to have it available to all of our customers soon. So we feel very good about what we are seeing in Bill Pay and how fast we're able to build it based on the platform capabilities that we have and the feedback that we've gotten from customers. I think back to your second question, you're right. And in fact, the vision I would take you back to is that we have set out to be the source of truth for a business and to truly be the center of small business growth. And in order to do that, we have to have capabilities that not only help a small business grow their customers, retain their customers, market to their customers, but to be able to manage their cash flow and be able to manage their employees. We now have all of those capabilities end-to-end. And I think particularly, what's important, that advantages us to deliver for our customers is the data and our AI investments that we've made in the last five-plus years. And I think I would just encourage you to attend -- and if you can attend when it's on real time, watch the replay of our September 6 Intuit Innovation Day. And you will see how with our data, AI and GenAI capabilities we help customers manage their cash flow and really digitize all of money movement in a way that's so intuitive, so easy and delivered at a moment of truth. So we're quite excited about what's possible as we look at this coming year, about the years ahead. And let me, by the way, be very explicit that none of our potential innovation that you're going to experience in September 6 around GenAI is included in our guidance. But we believe it is fundamentally revolutionary as we think about the world we're going to create in the future.

Thank you. Thanks, Sasan.

You’re very welcome.

And our next question comes from Brent Thill with Jefferies. Your line is open.

Sasan, when you mentioned prudent in the tax guide. I'm curious, are you baking in more wiggle room this year than in past years in the guidance or can you just walk through what you mean by prudent?

Sure. Great question. Well, first of all, I'll just take you back to what you already know, but I think it's important that we start there. This past year, IRS returns, we continue to estimate we'll be down a couple of points. The do-it-yourself category will be down nearly 1 point. And the driver of that, which we are now certain of, based on all the working analysis that we've done, is we had a number of folks that came in to get their stimulus dollars and tax credits, and so it was pandemic driven. And so that created just what you heard from Sandeep, a sort of a very unusual tax season. But then when you step back and look at the last four-year trend, it sort of straightened out. And so what we mean by prudent is really a couple of things. One, we're not assuming IRS growth in our numbers this year, and we're not banking on all of the innovation that I just shared paying off this coming year. And that's just part of us being prudent because we want to demonstrate to all of you that this is a business that grows 8% to 12%. And by doing so, we must deliver the results. And so it's just being very intentional and very prudent. As we think about, by the way, our guidance holistically, it's not just TurboTax, it's TurboTax, it's Credit Karma and the way we thought about Small Business. But those are -- that's the sort of the definition of what we mean by prudent.

Thank you, Sasan.

Yeah. You’re very welcome.

Our next question comes from Michael Turrin with Wells Fargo. Your line is open.

Okay. Great. Thanks so much. You delivered outsized margin expansion this past year. You've mentioned a focus on cost controls, given the tougher environment throughout the year, realize it's one of the guiding principles, but maybe, Sandeep, if you can just speak to what's allowing you to guide for continued margin expansion as a starting point here? And maybe how we should think about what's allowing for continued margin expansion as you break into the upper 30s there on the operating margin side? Thanks.

Thanks for the question, Michael. And let me unpack it a little bit. We go through a [indiscernible] planning process, as I shared in the prepared remarks. And due that process, if you look at one of the biggest needle movers to deliver growth both in the near term and the long term, so durable growth levers for the company. And we make sure those are funded for success, inclusive of Big Bets and investments in GenAI. So the 40 to 60 bps of guidance reflects those investments and, quite frankly, reflects the strength and resilience of our platform. As a reminder, this is an expansion we're delivering on top of the 3.5 points of expansion we delivered over the last three years. As I look ahead, I see plenty of runway for us to continue to operate in accordance with our financial principles to grow expenses slower than revenue, therefore, implying a margin expansion. And really, as I look at it, what gives me confidence is that we are an AI-driven expert platform, and we operate as an ecosystem across technology, across customer success, across marketing. So in addition to giving us a competitive advantage for having faster time to market as a -- from opting as an ecosystem, it also gives us advantage in getting operating leverage as we scale as a business.

Thank you.

Our next question comes from Taylor McGinnis with UBS. Your line is open.

Yeah. Hi, thanks so much for taking my question. Maybe I'll focus on the Small Business and Self-Employed full year guide, which was really strong. So I know there's a bunch of moving pieces in there between customer ads, mix shift, online services attach and price. But are you able to help us understand how each of those levers are contributing to the guide? And based on what you're seeing in the environment, what's giving you comfort and the durability of those growth drivers?

Yeah. Thank you for your questions. Let me start us off and Sandeep, please jump in if you want to add anything. First of all, we have a framework at the company level where we want to drive the majority of our growth from volume and mix and the lesser part from price, but we always focus on pricing for value. And so when we look at our growth drivers this year, it is coming from customer growth, and it is coming from mix and to a lesser extent this year compared to last year, by the way, from price. With that as context, I would just remind you that the big picture, when you look at our opportunity this coming year, but even in the next three to five years plus, we now have a platform and a portfolio of services where we have the opportunity to drive further adoption of our services from Mailchimp to payments, to payroll to time tracking and to a lot of our new innovations around Bill Pay and digitizing B2B that I just mentioned. But also, although we are three to four years in, we're just at the beginning of what's possible in the midmarket. Big market is a significant ARPC opportunity because these customers use a lot of the capabilities that I just mentioned, except they pay a lot more. And we're just at the beginning of the flywheel of penetrating mid-market. So when you look at the portfolio of the services that we have, the strength of the experience that we're delivering because of data and AI and because of mid-market, it allows us to drive most of our growth from customer growth and mix. And none of that, by the way, takes into account what's possible as we look into the future with our generative AI experiences that you'll be able to observe on September 6. But those are the main drivers.

And Taylor, I would add, over the long term, we remain committed to our growth algorithm of 10% to 20% ARPC and customer growth. That remains unchanged. And really, as Sasan mentioned, is our innovation across our platform that gives us -- opens up the aperture for us to cross-sell and upsell our customers across more offerings on our platform as those opportunities for us to price for value as we look ahead.

Great. Thank you.

Very welcome.

Raiza, we’re ready for our next question.

And our next question comes from Kash Rangan with Goldman Sachs. Your line is open.

Hi. Thank you very much. I hope you can hear me okay. So the recession that everybody's been expecting, it doesn't seem to be quite happening. Sasan, I know you've got a great read on your SMB ecosystem. What are some of the indicators that you're seeing? And if you've already proactively addressed this, my apologies for bringing it up again. But what are some of the forward-looking indicators that you see in the Credit Karma business or the SMB ecosystem that give you renewed confidence that we are going to be okay? Because your fiscal '24 guidance definitely is not reflecting of any caution in the environment, but more like a continuation of what we've seen in the last four quarters. Just some thoughts there would be great. Thank you so much and congrats.

Yeah, sure. Thank you for your question. And you're loud and clear, my friend. So let me start with Small Business. And generally, I would just lead with they continue to be healthy, but they're challenged in this environment. The specifics that I would share is the cash flow -- cash reserves of Small Businesses is 90% of what it was this time last year. However, it is still stronger than pre-pandemic. The -- in terms of looking for labor and finding employees to drive their growth, that's still quite strong. And in fact, in this environment, Small Businesses are able to do a better job finding what they need versus when the market was hot, which is good for them because then they can deliver for their customers and drive growth. And the last thing I would just say is there are certain sectors that are very weak, transportation, real estate, advertising, is very weak within small businesses. So that's the aggregate picture. I'll end with what where I started, struggling, but still healthy compared to pre-pandemic. On the consumer side, let me hit on sort of two different points. I'll quickly hit on Credit Karma. As you know, Sandeep mentioned, what we're seeing is stability and our innovation that we've been focused on is really getting hold, and there's some exciting things that we're working on in Credit Karma that we'll share both on September 6 and at Investor Day, one where we redesigned the entire app. And we have begun to roll it out to a small cohort of customers and will eventually scale it. And we're actually seeing very good engagement with the redesigned app. And then that, coupled with our GenAI experiences, along with all of our innovation with Lightbox and Credit Karma Money gives us a lot of excitement around the future, none of which, by the way, is in our guidance. But the headline is stability in Credit Karma and lots of innovation that is helping us with where we are and coming. If I just focus on the consumer, a couple of things I would say. If you look back to last March of 2022, credit scores are, on average, down 13 points. Credit balances are up about 30%. And the credit band of like [600 to 660] (ph) have the largest balances. They're carrying about $10,000 on average. And the Gen Z balances have gone up the most, are up 45% year-over-year. So job market is still good. People still have jobs, but there's certainly some level of strain on the consumer.

Brilliant. Thank you so much.

Very welcome.

Our next question comes from Brad Reback with Stifel. Your line is open.

Great. Sasan, following up on that Credit Karma commentary. Obviously, the world we live in today is different than when you acquired the business. Do you think the long-term growth rate of Credit Karma is meaningfully different in a world where interest rates are mid-single digits versus zero? Thanks.

Yeah, Brad, thank you for your question. The short answer is no. We're very bullish on the business. And in fact, a couple of things that I would share with you, which we can talk more about at Investor Day, but just not to leave you hanging, the monetization model in Credit Karma is how many members you have, how frequently they engage. And there's a model for -- every time a customer engages, there is a average revenue per customer that we benefit from. And in fact, this past year, in '23, when our results were down year-over-year, our frequency of engagement is actually higher than the prior two years where we had 37% growth and 58% growth. Now why is that? It's because of all of our innovation. It's because the customer is engaging but in many areas, credit is still tight. So when credit begins to open up, and that's the stability that we're seeing now, we view this business will accelerate back to the 20% to 25% growth rate. Plus I'll remind you that, that plus the integration with TurboTax drives actually more stickiness, more monetization and truly created this one consumer platform, which was our vision from day one when we acquired Credit Karma. And with all of the data and AI capabilities that we have in our accelerated GenAI experiences, as I said earlier, you're going to see on September 6, some of the new innovations that are coming that will make it easier for customers to find what they need, the benefits that they need to engage in the financial products that they want and manage their money. And so all of that leads to our view is completely unchanged relative to the long-term expectations of 20% to 25% growth in Credit Karma.

And Brad, the one thing I would add to this because you asked about a scenario in which interest rates are higher. When interest rates are higher, the consumer have a higher propensity to shop around because even a small improvement in the rates that they're getting, has a bigger difference in terms of the interest rate they're paying and a bigger difference to their bottom line. So in fact, the product becomes more important critical to the end user in a higher rate environment.

That’s great. Thank you very much.

Very welcome.

Our next question comes from Kartik Mehta with Northcoast Research. Your line is open.

Good evening, Sasan. This year, you're really focused, at least from a TV advertising standpoint on full service, really trying to get the message out. And I'm wondering, one of the things you talked about is being a little bit more prudent on revenue growth on the consumer business. I'm wondering are -- will your strategy change at all and how you're marketing the full-service product? And how did the full-service product perform compared to your expectations this quarter as well -- this year as well?

Yeah. Great question. Let me give you an answer that I think you'll find somewhat helpful and somewhat vague intentionally. We learned a lot this year. We came into the year with a full service offering that has product markets, that as you know, it's all AI-driven. And we can virtually get things done within an hour or same day. We learned a lot around health and scaling and how to have customers find our full-service offering. And a lot of it also has to do with what I mentioned earlier, which is local marketing. If I'm in San Diego, if I'm in Kansas City, even if I see that TurboTax can provide experts, I go to start to see locally if there's somebody there. Well, all of our experts that we have are within 10 miles of many of the households in the United States, but we've never marketed that way. And so that's going to inform our marketing going forward. So there's a lot that we learned in terms of how to evolve our marketing, so it becomes an and, and not an either/or, and we're excited about it.

Thank you.

Yeah. Very welcome.

Our next question comes from Kirk Materne with Evercore ISI. Your line is open.

Yeah. Thanks very much. Sasan, I'd love to hear you just give a little bit more detail on what you're counting on Mailchimp to do this year and maybe not if you don't want to get too much into the quantitative side. Qualitatively, you guys have done a lot of work around the product, the monetizaiton. How important is sort of a continued acceleration of Mailchimp as you look at sort of the small business in aggregate for next year? Thanks.

Yeah, Kirk, thank you for your question. It's really -- to answer your question, it's really threefold. First and foremost, as you know, we made this acquisition ultimately to create one growth platform, so we can help a small business in one place, be able to grow their business and manage their cash flow and manage their workforce all in one place. And really the key to all of this has been data, AI and now our accelerated investments in GenAI. And so first and foremost is we want to make significant progress in this area, and you'll actually see some of this on both September 6, our Intuit Innovation Day and at Investor Day. That's number one. The second is, as I mentioned earlier, we had the largest release in June that we've ever had in Mailchimp's history. We had 150 new and updated features that we released on top of the multiple GenAI-driven announcements that we had made a couple of weeks prior to that. So our second focus is adoption, getting our customers to adopt these benefits because not only will it help fuel their success, but it will help us with monetization, particularly in the mid-market, which is where our focus is very similar to the focus that we've had with QuickBooks' mid-market. And then third is international. Mailchimp is the lead horse internationally. And we've done a lot to localize the product. I mentioned earlier in the five languages and more is coming. We've also been doing a lot of price studies and price testing because we've had like one class price internationally. That doesn't work. Some countries should be higher, some countries should be lower. And so we've learned a lot in terms of some of our testing and many of that we're going to be scaling this year. So those are -- if I were to just sort of carve out your question, those are the three big areas that we are very focused on in the coming years.

Great. Thanks, Sasan.

Yeah. You’re welcome.

Our next question comes from Brad Zelnick with Deutsche Bank. Your line is open.

Hi, everyone. It’s Nick Giovacchini on for Brad this evening. Congratulations on the strong end to the year, and welcome, Sandeep. I appreciate you taking the question. International growth has decelerated since the beginning of the year. Can you talk us through how you see that growing going forward? Thanks.

Thanks for the question, Nick. A couple of things on the international growth. On international growth, as I shared earlier, our focus, our refreshed strategy is to lead with both Mailchimp and QuickBooks in the markets where we have product market fit. And in other areas to lead with Mailchimp at the tip of the spear. Our growth decelerated for a couple of reasons, and some of that Sasan shared. As we lead into rightsizing the pricing for Mailchimp in some of these geographies, historically, it was the same price. It was basically the price in the US simply converting into the local currency and applied in that geography. We went in, and we looked at what the price should be based on the competitors in the market, based on the GDP per capital and all these other factors and we rightsized the price. Secondly, as we do in QuickBooks, we introduced free trials or discounts initially when folks join the product is what we have experienced over our years of doing that is people -- more people come into the product and they stick around. That leads to a better 90-day forwarded retention, et cetera. These are all the factors and all the improvements we're making in the Mailchimp product and the lineup, which is leading to what I would describe as a temporary headwind in terms of our international growth.

Great. Thank you very much.

Very welcome.

Our next question comes from Alex Zukin with Wolfe Research. Your line is open.

Hey, guys. Thanks for taking the question. And congrats on a really nice and prudent guidance methodology for next year. I guess maybe I'll just -- I want both of my questions to really target the SMB growth rate. It seems like the guide there ex Mailchimp is really strong. Sandeep you're now in the CFO seat, maybe just talk about -- you talked about the prudence intact, but the prudence in the SMB guide, what gives you guys the confidence to kind of guide that way? How much of it has to do with some of the payment functionalities that are coming to market, some of the GenAI functionality that's coming to market, what gives you guys that guidance? And then dovetailing into that, new leadership for that group, obviously, as well. Is there talk about the potential for either disruption or how is that accounted for? Or why Mariana was the right fit for that role specifically and kind of where -- what you're going to bring to the table in?

Alex, can I take the leadership question and take it more broadly and then let Sandeep jump in and answer specifically your question around the guide. Let me take this opportunity to talk about the leadership changes that we've had in the company. And I'll, of course, include Mariana in that as well. First of all, one of our greatest superpowers as a company is leadership development and succession planning. One of the focus areas that we have as part of our Intuit operating system, which starts at the top with my staff and staff is we spend four times a year, several days at a time, focusing on talent, focusing on succession planning, reviewing development plans and being very intentional about architecting mobility moves. And ultimately, our goal is to be 3D in all of our key roles at multiple levels in the company, which, by the way, is very hard to do. But that is why we are a leadership factory. The second thing I would say is that we are very focused on mobility of senior roles, so the Vice President and above, which is an officer of the company and above, typically within a three- to five-year period, there's a lot of it -- you don't have visibility to, of course, because you only see potential changes that happen in my staff. But we're very intentional about mobility because we believe fresh perspective, fresh thinking is important in our technology areas and our businesses and also training the leaders to be ready for a bigger job is very important. By the way, I'll use myself as an example. Before I stepped into the CEO job 4.5 years ago, I was in TurboTax for three years. I was in QuickBook -- running Small Business for three years when I was the CIO for two years. So that's just an example of mobility. With all of that said, sometimes our mobility is up and to the right and changes within the company. Sometimes we celebrate folks taking on roles outside of the company because that may be the best fit for them. So with that as context, we have a lot of confidence in our leaders, and let me now specifically touch on our three of the leaders just to make it very real. When you look at Mariana, I actually hired Mariana into Small Business when I was there. She was our Chief Product Development Officer and is very familiar with Small Business. When I became the CEO, I moved her into the CEO role, and she's done an unbelievable job fueling innovation across the company. And now she's going back home to where she started running Small Business. And very excited about what she will do to unlock the next year of growth. When you look at Mark in TurboTax, I actually started with Mark in TurboTax a decade ago. and worked with him for three years. We then -- after I left TurboTax a few years later, promoted him to be our Chief Customer Success Officer of the company. And he is the godfather of our live platform that we talk a lot about today. And now he's going back home and running TurboTax. So he's very well versed not only in the business, but our disruptive growth driver of the future, which is live. And then Alex Balazs, just upon our CTO role, I also worked with him in TurboTax. We then move them to a broader Chief Architect and data role, where he's been Mariana's right-hand person, fueling the innovation across the company. We just moved him into the CTO role. The reason I wanted to go through that a bit fairly is for all of you to understand that succession planning and leadership development is our sort of core competency. And I actually believe that we have the strongest team that we've had ever built for the era of AI given their backgrounds and experiences. So with that as context, let me have Sandeep answer the other part of your question, Alex.

Absolutely. And actually, let me touch on one additional point to what Sasan added, it's never about one individual. We are a system, and we have strong leadership teams around our General Manager and CFO staff as well. So getting back to your question on the guidance, Alex. So just for context, the Small Business group grew 24% in fiscal '23, with four of those points coming from the benefit of the timing of the Mailchimp acquisition. So that's about a 20% organic run rate. And as we have shared with you with -- the group in the past is 80% of the revenues in the Small Business group are subscription-based. So that makes -- so the recurring nature of the revenue makes it highly predictable. And we -- this year's strong results in areas where we are focused, such as QuickBooks Advanced customer growth as well as in the mid-market area that Sasan touched on. So that is one component giving us confidence as we guide for next year. The second aspect is it's the importance of our products to SMBs. This is something core to how they run their business, how they pay their employees, how they get paid themselves, how they get access to capital to take on new projects and grow their business. And we have made tremendous improvements in our product in an ecosystem that makes that platform that much more relevant and important to the lives of our customers. So that is what's all baked into the guidance that we provided for the Small Business and Self-Employed Group. You asked a question if we were reliant on GenAI. I want to reiterate and be very clear. GenAI, we believe it will be an accelerator for our business, but that is not baked into the guidance that we shared with you all today.

Super clear. Thanks a lot, Sandeep and Sasan. It was very in-depth explanation. No doubt the talent factory is alive and well.

Thank you, Alex.

We'll take our next question from Mark Murphy with JPMorgan. Your line is open.

Hi, this is [indiscernible] on for Mark Murphy. Congrats on the quarter and thanks for taking my question. I just wanted to dig in on Credit Karma, specifically as it relates to the opportunity to begin to pursue prime customers in addition to the subprime and near-prime customers you guys have kind of focused on historically? Thanks.

Yeah. Thank you for your question. Yes, it's a big focus area for us going after prime customers. And just for context, it's sort of a third of our monthly active users, and they're the least engaged because really, when you look at the platform, we traditionally focused on subprime and near prime. And we have a lot of the capabilities that we've developed in the past and know these prime customers very well, which is why we have merged our Mint and Credit Karma team and platform to really solve for these prime customers. And so we have been working, I think, for the last almost a year, really understanding their needs, running a number of experiments and are now -- and has been in the midst of launching multiple things that are very geared towards prime customers. And we're actually very excited with the app redesign. There's sort of two big things that we've been working on in Credit Karma beyond what we've been sharing with you. One is really redesigning the whole app to enable customers and certain cohort of customers like Prime to be able to find the benefit that they're looking for because of everything that we know about them proactively. The second is the GenAI experience is that, again, we will unveil more of September 6. And the combination of those two things and what I shared a moment ago around Prime customers gives us a lot of sort of excitement around what's possible to serve these Prime customers going forward, which is something that we've not benefited from a monetization perspective. None of that is included in our guidance, but it's something that we're very excited about.

Thanks for the insight. Looking forward to learning more about it.

Yep. Thank you.

Our next question comes from Brad Sills with Bank of America. Your line is open.

Wonderful. Thanks so much for taking the question. I wanted to ask one on AI here as well. It sounds like some exciting things coming, looking forward to learning more about that. A lot of possibilities here within Small Business and Consumer. Would just love to get your perspective on kind of where you're coming from? Sasan, you've alluded to the fact that Intuit is well prepared here because of the platform capabilities here and the underpinnings of that with data. So just curious, any color as to where Intuit is coming from such that you're able to iterate on AI the way that we're looking forward to learning more about.

Yes. Thank you for your question. I'll start with taking you back to five years ago when we declared our strategy was to really shift the company from just a tax and accounting platform, which is a very important set of problems to solve for customers to a global financial platform that really played a far more meaningful role in powering the prosperity of consumers and small businesses on a daily basis. When we made that strategic declaration on the five bets that ensued, what we talked about at that time was that data and AI was going to be core to making that shift. And in fact, when we made the acquisition of both Credit Karma and Mailchimp, one huge driver of the acquisition was around the data, because in essence, we will know a lot more about customers, and we could leverage that data for their benefit to fuel their success. So -- and even five years ago declaring this, data and machine learning has been a decade-long focus of Intuit. So when you think about a decade-long investment in data usable data, cleaning the data and making sure that it's structured in a way where it can be used and then our investments in AI, specifically in knowledge engineering, which really takes rules and the relationship between data and turns it in the code is what our advantages in TurboTax, machine learning and natural language processing, those have been -- it's been a decade-long set of investments and the two acquisitions have propelled us forward about 10 years. And then you couple that with what we started several years ago, which is GenAI. And then what we launched in June, which is Generative Operating System, GenOS, which by the way, is not something you can create overnight. This is years of investment. When we couple those kind of investments, data, AI and GenOS, which is really primarily our own Intuit financial large language models that are trained on our customers' proprietary data, it allows us to personalize things, humanize things and do the work for customers in a way that's revolutionary, which ultimately gets to the punch line of we are creating a future that is done for you. Rather than you having to do the work to run your business, rather than you have to do the work to be able to power your prosperity, manage your finances as a consumer, we want to put you in control where it's done for you. You're always in control, you have the taste of whether or not you move forward with a decision. But we want to be able to help you grow your customers and run your business for you and help you manage your cash flow, always put the right choices in front of you. And the same thing goes on the tax side and Credit Karma side. So that's what's so exciting about -- it's a decade-long focus. We really tripled down on it five years ago when we declared our strategy. And we're -- we have now galvanized and energized the entire company that the [future of done for you] (ph) that we declared five years ago is very real, very much here. And we had an enormous opportunity to do amazing things for our customers. And that's what really gets us excited about what's possible. And so I can do another advertisement, join us September 6 for Intuit's Innovation Day, followed by Investor Day, and you'll get a real good feel for the world that we are going to create for the future.

Looking forward to it. Thanks, Sasan.

You’re welcome.

We'll take our last question from Scott Schneeberger with Oppenheimer. Your line is open.

Thanks very much. Welcome Sandeep. And good afternoon, Sasan. The -- I have a couple on consumer, one very high level and one, just a clarification. So the first is on...

Scott, you cut out on us.

Raiza, can you try to bring him back?

Thanks, Scott. Your line is open.

Thanks. Sasan, can you hear me?

We can now. Yes, if you don't mind start over again, we lost you.

Absolutely. Thanks. So two quick on consumer. First, volume and price mix. Just your consideration of that going into fiscal 2024 and beyond given the trends of the recent years? And then for you or Sandeep, just curious in the extension season in the post-tax season, what did you see? Anything interesting with California? Should we see a shift from fiscal '23 to '24 that's material related to anything extension wise? Thank you.

Sure. Let me start with your volume mix question around TurboTax. I would say the way to think about it was what I described earlier, leaning into full service, leaning into business tax and continue to lean into TurboTax Live, which really comes with assistance, recognizing it's all data and AI driven. You're going to see more come from ARPC than volume, and that's just the nature of the opportunity. Now there is 88 million-plus people that are in the assisted segment and there's $30 billion of spend. So there's both a volume opportunity and an ARPC opportunity. Just our view, looking at the next 10 years, by the way, this is not a one-year answer, both matter, you're going to get -- we're going to get more from ARPC. And I'll let Sandeep jump in here as well. I mean on the extension season, that's just been very weird with many states that got extended to July and California to October and what we're seeing from customers is they're even gotten confused which month they have to file in their state. So net-net is there's more to file. When you look at it at the company level, it's really not material, but not everybody has filed yet.

And that’s -- that's basically the answer, Scott. It's not material for our Q1. It's been a unique behavior on the taxpayer. But I'll also remind us that last year, we also saw a great deal of extensions by taxpayers. So that's also something to keep in mind as you look at Q1.

Thank you, both.

All right, everybody. I think that brings our questions or Q&A to an end. So thank you for your wonderful questions. Thank you for spending the time with us. We look forward to seeing you September 6 and -- at our Investor Day. Take good care. Be safe. Bye, everybody.

Thank you, all.

Goodbye.

Ladies and gentlemen. Thank you for participating. This concludes today's conference call.