TurboTax maker Intuit beats earnings, revenue estimates

Sasan Goodarzi, Intuit CEO, talks company earnings and boost in TurboTax, QuickBooks, and Credit Karma users.

Video Transcript

ZACK GUZMAN: Welcome back to "Yahoo Finance Live." We've got another company reporting earnings to watch today. And Intuit had seen a pretty nice pop here off those results-- top and bottom line beat for Intuit, the parent company of TurboTax and a QuickBooks.

The company reported revenue of $2.56 billion for the quarter. That was up 41% from a year ago period. It also got quite a bit of a boost there-- $405 million in revenue coming from the recently completed acquisition of Credit Karma. For more on that quarter and results there, I want to bring on the CEO of Intuit, Sasan Goodarzi joins us right now alongside Yahoo Finance's Brian Sozzi.

And, Sasan, good to be chatting with you again today. Congrats on the quarter here. Not only did you top expectations on both lines there, but you also upped your guidance. Talk about what you saw and what gave you the confidence looking forward.

SASAN GOODARZI: Yeah. Well, first of all, Zack and Brian, thank you so much for having me. You know, I would just say that we are really experiencing some digital tailwinds from folks shifting to engaging in a virtual world, more and more folks that are accelerating their adoption of online offerings and omnichannel, and then last but not least is we're seeing an explosion of folks that are really using platforms to manage their money.

And so if I translate those digital tailwinds into what we're seeing, the teams have done an amazing job innovating for our customers. And so our customers are using more and more of our virtual solutions to do their taxes and run their business-- and this is both TurboTax Live and QuickBooks Live.

And secondarily, we're seeing a really strong comeback with Credit Karma where we serve well over 100 million customers. And we're able to help them personalize offers for financial products that are right for them-- whether it's credit cards, personal loans, auto insurance, free checking and savings accounts. And then last but not least is small businesses, I think more so in the pandemic, recognize that using a platform, in particular in this case QuickBooks, to be able to run their business allows them to power and fuel changes in their business model-- getting paid faster, being able to grow customers in different ways. And if I put all those things together, that's really why we're experiencing the acceleration that we just announced yesterday at earnings.

BRIAN SOZZI: Sasan, I was talking to someone who follows your company closely, and they mentioned to me they're starting to see some pretty large synergies between TurboTax and Credit Karma. What are some of those synergies unfolding right now?

SASAN GOODARZI: Yeah, Brian, that's a great question. You know, the way we truly think about the company and talk about the company is, really, we are one platform. And very specifically, we have launched Credit Karma as part of the TurboTax experience. So if you're doing your taxes or you're having an expert help do your taxes for you, at the end of the filing experience, you can deposit, ultimately, your refund on a Credit Karma money platform.

And then you can not only get a free checking and savings, but you can get early access to your paychecks, you can get access to financial products, and the reverse is true. We ran a number of experiments and launched TurboTax as part of the Credit Karma platform. So if you're on Credit Karma leveraging the platform to do the things that I mentioned earlier like watch your credit score, are you paying bills on time, what financial products that are right for you will contextually make you aware of your tax situation.

And ultimately, you can get your taxes done while you're on the Credit Karma platform with TurboTax, whether you choose to do it yourself or you have somebody do it for you. And we just actually announced launching Credit Karma as part of the payroll platform, so that an employee can ultimately put their direct deposit on Credit Karma money, and ultimately over time be able to get early access to their paycheck.

So you can really think about Intuit as a platform company that's focused on the benefits that matter most to customers. And we're leveraging the assets across the company to accelerate benefit delivery for all consumers, self-employed, and small businesses that we serve around the world.

BRIAN SOZZI: Really sounds like a completely different company compared to last time we talked to you about five or six months ago. Now, you do have an investor day coming up next month, I believe. To the extent you could, what is the longer term top and bottom line growth rates? What do they look like to you inside Intuit compared to, let's say, how the company is growing the past five years?

SASAN GOODARZI: Well, you know, we're building on a 37-year foundation where we've built capabilities where we can truly operate as a platform company to deliver the benefits that I just shared with you. But at the same time, we have a lot more leverage now because we're building services ones that can be deployed across all the offerings that I shared with you a moment ago, building them with APIs so our engineers can build on those services very, very quickly.

So it gives us the ability to, one, accelerate our innovation, but also have operating margin leverage. You know, to be very specific, our innovation is up 2x compared to a year ago. And last year we were up 2x compared to the year prior. And we measure that by code deployments and impact, while at the same time, we're investing in all the areas that we believe is critical, but our operating margin also expanded. And that's the leverage of a platform company.

So we provided, as you said earlier, great performance, great guidance moving forward. And we believe over time, we can continue to accelerate the growth of the company just given that we are truly now a platform company.

ZACK GUZMAN: Yeah, on top of that, I mean, you talk about the acquisitions and investing in the company. You're also stepping up your share buybacks here-- $1 billion stock in fiscal 2021, initial $2 billion cleared by the board there. I mean, when you talk about maybe the best use of capital here right now, are there other opportunities you're looking for beyond Credit Karma to add to the suite and really, I guess, grow some of those synergies you're just discussing? Or is this the best way to go? You also boosted the dividend too about 15%.

SASAN GOODARZI: Yeah, well, you know, we have very clear financial principles in the company that we follow. And really, our first financial principle is to grow revenue double-digits. And we want to grow operating income faster than revenue. That's where the platform leverage comes in.

But all of our really excess cash goes to investing organically into the company. And then if it makes sense where we have capabilities where we want to accelerate, we'll look to acquisitions. And then, of course, we'll look at things like dividends.

So we have very clear, prioritized principles. The number one thing that we are focused on is delivering for our customers and accelerating growth. And just as we did with Credit Karma, we will make acquisitions that align with our strategy, a culture fit where we can really propel ourselves forward 5 to 10 years, which is what Credit Karma did for us. And we're excited about having Credit Karma as part of the family and the opportunities that it creates for customers.

BRIAN SOZZI: Really Intuit, Sasan, has a great pulse on the health of small businesses in this country. Given where we are in the pandemic, what is the health of small businesses?

SASAN GOODARZI: Brian, I'll just cut it quickly by geography and industry. I'll start with the US. I would say the US has bounced back quite nicely in many aspects, when we look at our data on our platform-- and that's acquisition, retention, charge volume, the number of employees that small businesses are hiring. It's really bounced back to pre-pandemic levels.

And when you double-click on that, it's really dependent on industry and states. You know, there are some states that have recovered much faster than other states. There are industries-- more service industries, which is where we serve, have bounced back a lot faster than retail-- you know, whether it's restaurants and so on, which have experienced what it takes to be shut down and then open back up.

Last thing I would say on the US is when we look at our base, although small businesses have recovered, about 20% of our customers, their net deposits is down more than 20% compared to pre-pandemic levels. So great recovery in the US, but really, there's more to be done to ensure that small businesses are back to the health that they experienced pre-COVID.

I would say internationally, it's a little bit of a different story. Canada is a couple of notches behind the US in the recovery. And then most of the other countries that we're in-- UK, France, Australia, just to name a few-- they are really much slower in recovering, both the consumer and small businesses, because those countries have been opened up, shut down, opened up, shut down multiple times.

And it's really impacted the confidence level of small businesses where you know if they're in product-based businesses, they're not building up their inventory. They're not hiring employees because they're just not sure if they're going to be shut down again or not. I'm confident they'll recover once we get through this health crisis, but they've just been much, much slower to recover than the US.

ZACK GUZMAN: The question there still remains about some of those that we're dealing with the stop start, how many are going to be still standing after all of that as well? But we'll be watching that. Sasan Goodarzi, the CEO there of Intuit, appreciate you coming on here to chat with us again alongside Yahoo Finance's Brian.

SASAN GOODARZI: Thank you for having me. Take care. Bye bye.

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting