Intuit Q4 2022 Earnings Call Transcript

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Provided by AlphaStreet
August 23, 2022
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Operator

Good afternoon. My name is Chelsea, and I will be your conference operator today. At this time, I would like to welcome everyone to Intuit's Fourth Quarter and Full Fiscal Year 2022 Conference Call.

[Operator Instructions] With that, I will now turn the call over to Kim Watkins, Intuit's Vice President of Investor Relations. Ms. Watkins, please begin.

Kim Watkins
Vice President of Investor Relations at Intuit

Thanks, Chelsea. Good afternoon and welcome to Intuit's Fourth Quarter Fiscal 2022 Conference Call. I'm here with Intuit's CEO, Sasan Goodarzi; and Michelle Clatterbuck, our CFO.

Before we start, I'd like to remind everyone that our remarks will include forward-looking statements. There are a number of factors that could cause Intuit's results to differ materially from our expectations. You can learn more about these risks in the press release we issued earlier this afternoon, our Form 10-K for fiscal 2021, and our other SEC filings. All of those documents are available on the Investor Relations page of Intuit's website at intuit.com. We assume no obligation to update any forward-looking statement.

Some of the numbers in these remarks are presented on a non-GAAP basis. We've reconciled the comparable GAAP and non-GAAP numbers in today's press release. Unless otherwise noted, all growth rates refer to the current period versus the comparable prior year period, and the business metrics and associated growth rates refer to worldwide business metrics. A copy of our prepared remarks and supplemental financial information will be available on our website after this call ends.

With that, I'll turn the call over to Sasan.

Sasan Goodarzi
Chief Executive Officer at Intuit

Great. Thank you, Kim, and thanks to all of you for joining us today. We had a very strong fourth quarter, ending the year with momentum as we executed on our strategy to be the global AI-driven expert platform powering prosperity for consumers and small businesses. We continue to be focused on solving our customers' biggest problems by putting more money in their pockets, eliminating work and saving people time and ensuring that they have complete confidence in every financial decision they make.

Full year revenue reached $12.7 billion, up 32%, including the addition of Mailchimp and a full year of Credit Karma. Excluding Mailchimp, revenue grew 24%. Total revenue growth was fueled by 38% growth for the Small Business and Self-Employed Group, which includes 16 points from Mailchimp. Consumer Group revenue grew 10%, and Credit Karma had an outstanding year with revenue of $1.8 billion, up 58% on a pro forma basis year-over-year.

I'm very proud of the team's performance, delivering strong growth and strong margins, which very few companies at our scale are able to achieve. I'm optimistic about our strategy and opportunities for growth, especially considering an uncertain global macroeconomic environment. The Intuit platform remains mission-critical for powering our customers' prosperity. I'm pleased we are guiding to another year of strong revenue growth and strong margins in fiscal year 2023.

Our global AI-driven expert platform strategy is accelerating innovation, and our five Big Bets are solving the largest problems our customers face. We continue to deliver strong proof points that demonstrate the success and are well positioned for durable growth in the future.

As a reminder, our five Big Bets are: revolutionize key benefit, connect people to experts, unlock smart money decisions, be the center of small business growth, and disrupt the small business mid-market. We will share more on our vision and the outcomes we're driving across each of these Big Bets next month at our Investor Day.

Now let me turn to a topic that I know is top of mind for many of you, the resiliency of our business and the slowing macroeconomic environment.

Our company is in a significantly different position than it was during the last recession more than a decade ago. Our platform and cloud-based offerings have significantly expanded to become the platform of choice for consumers and small businesses. Therefore, Intuit is even more mission-critical for our customers we serve. We have highly predictable reoccurring revenue, and much of our business is subscription-based.

Additionally, the scale of our platform along with our rich data gives us the unique ability to see leading indicators, such as growth in charge volume, number of hours employees are working and number of workers paid, bank account balances of our small business customers, credit card utilization and delinquency rates for members. This allows us to be forward-looking and adjust quickly.

Let me share how we think about our business in context of a mild recession. To start, in fiscal year 2022, 51% of our revenue came from the Small Business and Self-Employed Group, 35% from our Consumer and ProTax businesses, and 14% from Credit Karma. First on tax. Our tax businesses are very resilient, and we do not expect a mild recession to have any significant impact. Next, with Small Business and Self-Employed Group, QuickBooks and Mailchimp are mission-critical for our customers whose livelihood depends on our platform.

In fiscal year 2022, approximately 80% of the Small Business and Self-Employed Group revenue was subscription-based. As a reminder, Mailchimp is also primarily subscription-based, which adds to the scale of our subscription volume. The approximately 20% is transactional-based and includes revenue from QuickBooks payments, capital and per employee pricing for time tracking and payroll. In a mild recessionary environment, we may see an impact on these transactional businesses. In Q4, we did not see any impact. This demonstrates how mission-critical our platform is, especially in this environment.

Finally, turning to Credit Karma. This is the business that could be most impacted by weakening economic environment. As a reminder, this business represents 14% of Intuit's revenue in fiscal year 2022. While we expect member engagement to be strong in any economic environment, our financial institution partners could tighten access to credit.

In Q4, we experienced increased volatility in personal loans. Many partners that securitized loans are facing a more challenging funding environment as interest rates rise. For context, personal loans represent just over 1/3 of Credit Karma's revenue in fiscal year 2022. Although several personal loan partners tightened underwriting during the quarter, we were able to offset some of this with volume from other partners. This demonstrates the power of the platform.

In credit cards, we've not seen any significant impact. We continue to monitor delinquency rates, which we view as a leading indicator for future credit card origination trends. While delinquency rates have increased slightly, they remain near historical lows. We expect credit cards to be less negatively impacted by a mild recession than personal loans. In the mild recession of '01-'02, credit card originations declined only a few points. And for context, credit cards represent nearly half of credit cards revenue in fiscal year 2022.

We do expect Lightbox to continue to be a differentiator for Credit Karma as this technology allows lenders to deploy their targeting models in an encrypted environment and leverage thousands of anonymized financial attributes related to Credit Karma members and TurboTax customers. This provides more certainty to members and partners on the platform as recommendations are personalized.

Currently, no one else can replicate this. Partners usage of Lightbox at the end of fiscal year 2022 was at an all-time high, representing nearly 70% of credit card and personal loan transactions on a combined basis. This was up nearly 15 points from the prior year. We expect Lightbox to help make Credit Karma's business more resilient in a recessionary environment. Now with that as context, the guidance we are providing today assumes current demand trends continue.

Wrapping up, we feel more confident than ever in our long-term business strategy. In an uncertain macro environment, the benefits of our platform are more important and mission-critical than ever. As part of our three- and one-year plan that the Board just approved, we are investing heavily in innovation within each of our Big Bets to deliver benefits for our customers while delivering top line growth and margin expansion given the strength of our operational playbook.

Combined with our strong business fundamentals, including our balance sheet, Intuit remains in a position of strength. We're proud to be the platform of choice for over 100 million customers around the world who rely on Intuit to prosper.

Now let me hand it over to Michelle.

Michelle Clatterbuck
Executive Vice President, Chief Financial Officer at Intuit

Thanks, Sasan. For the fourth quarter of fiscal 2022, we delivered revenue of $2.4 billion, down 6%, reflecting the earlier IRS tax filing deadline this year, partially offset by the addition of Mailchimp; GAAP operating loss of $75 million versus operating income of $402 million last year; non-GAAP operating income of $433 million versus $715 million last year; GAAP loss per share of $0.20 versus diluted earnings per share of $1.37 a year ago; and non-GAAP diluted earnings per share of $1.10 versus $1.97 last year. You can find our full fiscal 2022 results in our press release and on our fact sheet.

Turning to the business segments. In the Small Business and Self-Employed Group, revenue grew 41% during the quarter and 20% on an organic basis, excluding $265 million in Mailchimp revenue. In fiscal 2022, revenue grew 38% and 22% on an organic basis. Online Ecosystem revenue grew 66% in Q4 or 32% excluding Mailchimp, and 61% for the full year or 34% excluding Mailchimp.

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 34% in fiscal Q4 driven mainly by higher effective prices, customer growth and mix shift. In fiscal 2022, QuickBooks Online accounting revenue grew 33%.

Second, we continue to focus on connecting the ecosystem. Online Services revenue, which includes Mailchimp, Payroll, Payments, Capital and Time Tracking, grew 116% in fiscal Q4. Excluding Mailchimp, Online Services revenue grew 29%. In fiscal 2022, QuickBooks Online Services revenue grew 107%. Excluding Mailchimp, Online Services revenue grew 34%. Mailchimp revenue included in Online Services was $265 million.

Although we're making progress with this business as we accelerated our year-over-year revenue growth several points in fiscal Q4 versus when we closed the acquisition in fiscal Q2, revenue was slightly below our expectations. During the quarter, we focused on product innovation to improve conversion ahead of peak season, which starts in September, and therefore, pulled back on marketing investments.

I'm confident that these are the right steps to position us well as we head into Mailchimp peak season. We expect to ramp up marketing in September after these enhancements are complete. We continue to have confidence in our game plan and acceleration priorities for Mailchimp.

Within Payroll, revenue growth in the quarter reflects an increase in Payroll customers and a mix shift to higher-end offering. Within Payments, revenue growth reflects an increase in charge volume per customer and ongoing customer growth.

Third, we continue to make progress expanding globally. On a constant currency basis, total international Online Ecosystem revenue grew 193% in fiscal Q4 and 23% on an organic basis excluding Mailchimp. Desktop Ecosystem revenue grew 1% in the fourth quarter and 4% for the full year. QuickBooks Desktop Enterprise revenue grew low double digits in fiscal 2022 driven by price increases and customer growth. Nearly all of our desktop accounting revenue is now subscription-based, similar to our online accounting offerings.

Moving on to Credit Karma. Revenue grew 17% to $475 million in Q4, another record revenue quarter, driven primarily by growth in average revenue per monthly active user. Full year revenue was $1.8 billion. We've had two exceptional years for this business, growing 37% in fiscal 2021 and 58% in fiscal 2022 on a pro forma basis, well above our longer-term expectations of 20% to 25%. On a product basis, revenue growth was driven primarily by credit cards and personal loans. This was partially offset by headwinds in auto insurance and home loans.

As Sasan shared earlier, we're seeing increased volatility in personal loans. We continue developing the emerging verticals by focusing on innovation with Credit Karma Money, which we believe is key to growing the frequency of visits over time. We remain excited about the opportunities ahead. Consumer Group revenue was $3.9 billion in fiscal 2022, up 10%. I'm proud of our execution this season as we grew share and average revenue per return.

Turning to the ProConnect Group. We reported $546 million in revenue for fiscal 2022, up 6%. Our financial principles guide our decisions remain our long-term commitment and are unchanged. We finished the quarter with approximately $3.3 billion in cash and investments and $6.9 billion in debt on our balance sheet. We repurchased $508 million of stock during the fourth quarter and $1.9 billion during fiscal 2022. The Board approved a new $2 billion repurchase authorization, giving the company a total authorization of $3.5 billion to repurchase shares. Depending on market conditions and other factors, our aim is to be in the market each quarter. The Board approved a quarterly dividend of $0.78 per share payable October 18, 2022. This represents a 15% increase versus last year.

We have an operating system we use to run the company, and this includes a proven playbook for operating in both good and difficult economic times. As a nearly 40-year-old company, we've been through many economic cycles. Our first priority is to do the right thing for customers, giving them access to the tools and offerings they need most. We manage for the short and long term and control discretionary spend to deliver strong results while investing in what is most important for future growth. The economic environment was a consideration as we look ahead.

We've identified several levers we can pull to deliver against our financial principles in a variety of scenarios based on where we see opportunities across our platform. Many of these can be pulled in real time should the need arise in areas like marketing spend, travel, hiring and others as we progress through the year in order to maintain earnings power while positioning the company for a stronger future.

We have a strong balance sheet that enables us to play offense in any macro environment. These principles are intended to accelerate our innovation in the future, and our goal remains for Intuit to emerge from any downturn in a position of strength.

Moving on to guidance. Our fiscal 2023 guidance includes revenue of $14.5 billion to $14.7 billion, growth of 14% to 16%. Our guidance includes revenue growth of 19% to 20% for Small Business and Self-employed, 9% to 10% for the Consumer segment and 10% to 15% for Credit Karma. As a reminder, Credit Karma grew 58% on a pro forma basis year-over-year in fiscal 2022, well ahead of our long-term expectation of 20% to 25%. Our overall guidance assumes recent demand trends continue.

Our guidance also includes GAAP earnings per share of $6.92 to $7.22, non-GAAP earnings per share of $13.59 to $13.89. We expect a GAAP tax rate of 25% in fiscal 2023. Our fiscal 2023 guidance includes stock-based compensation of $1.8 billion, an increase of 39% over fiscal 2022. Approximately 25% of this total is equity granted as part of the Credit Karma and Mailchimp transactions, and approximately 75% of this total is related to our broad-based equity program designed to attract, retain and incentivize employees. Looking ahead, we expect stock-based compensation as a percentage of revenue to flatten over the next few years.

Our guidance for the first quarter of fiscal 2023 includes revenue growth of 23% to 25%, GAAP loss per share of $0.43 to $0.37, and non-GAAP earnings per share of $1.14 to $1.20. You can find our full Q1 and fiscal 2023 guidance details in our press release and on our fact sheet.

Going forward, we're bringing Mint and Credit Karma together under a unified personal finance strategy. Starting in fiscal Q1, we will be reporting Mint as part of the Credit Karma segment. This is reflected in the guidance I shared today but is not material to the growth rate.

I also want to share an important change regarding our long-term expectations for Small Business and Self-Employed Group revenue growth going forward. In the past, we shared with you our aspiration to achieve Online Ecosystem revenue growth of better than 30% organically over time. We first provided this expectation in fiscal 2017 when our Online Ecosystem revenue was $850 million. It comprised less than a third of our small business ecosystem, and we were early in our journey building our online presence. Today, the Online Ecosystem is over 5 times larger at $4.4 billion, and it comprised more than two-thirds of total small business revenue in fiscal 2022. This, along with the fact that the majority of the business is now subscription-based given the shift to subscription in desktop. We believe the right measure moving forward is to look at the performance of our overall business rather than just the Online Ecosystem.

We now expect total Small Business and Self-Employed long-term revenue growth of 15% to 20%, up from 10% to 15% previously. While the Online Ecosystem will continue to be our growth catalyst, we will no longer provide specific Online Ecosystem goals.

With that, I'll turn it back over to Sasan.

Sasan Goodarzi
Chief Executive Officer at Intuit

Great. Michelle, thank you. As you have now heard from Michelle and I, we are seeing continued momentum across the company given our strategy of being an AI-driven expert platform. With our accelerated organic innovation and the addition of Credit Karma and Mailchimp, we are the leading global financial technology platform that powers prosperity for people and communities. We have a large TAM, secular shifts working in our favor, and a highly predictable set of revenue streams. Our innovation is unlocking new opportunities for our platform and delivering truly game-changing benefits for our customers. Intuit remains a best place to work around the world, and I'm proud of the team and what we've accomplished this year.

Now let me turn it over to you for any questions that you may have.

Kim Watkins
Vice President of Investor Relations at Intuit

Chelsea, I think we're ready to take questions.

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Operator

Thank you. [Operator Instructions] Our first question will come from Keith Weiss with Morgan Stanley.

Keith Weiss
Analyst at Morgan Stanley

Thank you, guys, for taking the question and a very nice quarter. Michelle, I think this is more of a question for you. For the FY '23 guide, you're looking for operating margins to continue to move higher or just to move higher from where they were in FY '22. Part of that is just kind of anniversarying the legal settlement on those part of FY '22.

Can you talk to us about sort of the organic, if you will, or sort of like the fundamental margin improvement that you're expecting in the business in FY '23? How big is that and how durable on a go-forward basis if we think about the model like beyond FY '23? Is this a progression that we could see being more durable in terms of driving operating efficiencies? Number one.

And number two, in your remarks about finding levers in the business, the one that really stuck out to me is saying -- you said there's levers to maintain the earnings power. So should I take that to mean that a lot of those levers have to do with the opex side of the equation, that there's levers you could pull to maintain margins and maintain profitability even in a weaker macro environment, if you will? Thank you.

Michelle Clatterbuck
Executive Vice President, Chief Financial Officer at Intuit

Hi, Keith. Thanks for your questions. Appreciate it. Yes, we are very happy to see our operating margin guidance for this coming year. It implies margin expansion of 100 basis points versus FY '22. And as you know, that aligns to our financial principles to be able to grow revenue double digits and operating income dollars faster than revenue. So we feel really good about that.

As we look at where that's really coming from, as we've been continuing to grow more and more as a platform over time, that really does enable us to look across the business and be able to drive efficiencies and effectiveness while driving accelerated revenue growth, which is resulting in our ability to expand margins while being able to continue to invest to really drive the accelerated revenue growth.

As to how we think about that, I don't really see anything that -- really structurally that impacts that over time. We haven't given any longer-term expectations or long-term guidance on what margins might look like in the longer term, but I don't necessarily see anything really structurally that prevents us -- as we continue to grow as a platform, that prevents us from continuing that growth.

To the second part of your question as for the levers that we would pull, yes, I mean, there are a number of things that we would pull, which could be opex. As I mentioned, there's marketing spend or travel, hiring, other things like that, that we can pull pretty much in -- a lot of those in real time to be able to impact our operating expenses and be able to maintain the margins that we have committed to.

So we want to be ready. It's really kind of what we do on a day-to-day basis. We're always looking for opportunities to drive different efficiencies across the business.

Keith Weiss
Analyst at Morgan Stanley

Awesome. Thank you very much.

Operator

Thank you. Our next question will come from Brad Zelnick with Deutsche Bank.

Brad Zelnick
Analyst at Deutsche Bank Aktiengesellschaft

Great. Thank you so much and congrats on a strong finish to the year and a strong guide for next year. Maybe for my first question, with Mailchimp a bit disappointing, can you double-click on the actions you're taking, and it is that gives you the confidence it's product and not the environment?

Sasan Goodarzi
Chief Executive Officer at Intuit

Yes. Brad, I'll take that question. First and foremost, I would share with you that we are the ones that pulled back that resulted in the performance that we just shared. The great news is it's in our control.

The second point I would make is the biggest thing that's been reaffirmed as we've been -- become one family with Mailchimp is two of the biggest problems that matters most to our customers, and especially, by the way, in tougher times, is being able to grow their customer base and being able to manage their cash flow. And the biggest insight that we learned as we started accelerating our marketing spend, which we had shared with all of you that we would do, is that there are conversion gaps in the product that we felt like were critical to address and not just spend the marketing dollars without the benefit of improved conversion. And specifically, those were things like coming to the website and the number of people that we saw falling off versus what we would expect based on our experience with across the QuickBooks platform, across the Credit Karma platform, the TurboTax platform, what we believe are some best-in-class engagement and conversion.

Then when you get into the product, we measure active use, and making sure that you're getting into the features that you really wanted to get into and hence why you signed up for Mailchimp, and even our checkout process. So those are just three illustrative examples of what I would say just basic blocking and tackling product conversion that we really wanted to double down on to make sure that we are ready for busy season.

That did not take away from the priorities that we have shared about Mailchimp, which is, one, is to create one growth platform with QuickBooks, which we are on track to do. Two, it's to double down on international. In fact, it is now part of our refreshed international strategy to double down on helping customers grow customers with Mailchimp. And then the third is to actually go into mid-market.

So what we just announced in terms of our results actually has nothing to do with the environment. It has everything to do with what's in our control and decisions that we made very explicitly to be ready for busy season. And these are playbooks that we know how to execute when it comes to product conversion.

Brad Zelnick
Analyst at Deutsche Bank Aktiengesellschaft

Thank you. That makes a lot of sense, Sasan. And maybe if I can follow-up with a quick one for Michelle. Michelle, just on the long-term guidance and how we're thinking about small business going forward, and you talked about a range of 15% to 20% growth versus -- up from 10% to 15%, but thinking more holistically. Just as I think about some of the pricing actions more recently in desktop, for example, can you just remind us, as you think about that long-term view, how should we think about pricing as a lever and pricing for value going forward? Thank you.

Michelle Clatterbuck
Executive Vice President, Chief Financial Officer at Intuit

Hey, Brad, thanks for the question. We're really excited about being able to raise the long-term expectations for small business from 10% to 15% to 15% to 20%. I just think it goes to show, as Sasan talked about earlier, really the mission-critical nature of the products and the offerings that we have in small business.

As we have increased the growth expectations, the growth algorithm overall is really still focused on the same things. It's about driving customers and it's about driving ARPC. Yes, pricing may be part of ARPC, but really, it is about focusing on driving value and how do we continue to provide offerings for customers that may have a higher ARPC, whether it's QBO Advanced, QuickBooks Live, those kinds of products. And we really are focused on pricing for value, so not just continually raising price. But once we're delivering those additional features that are providing additional value to the customers and we're bringing more innovation to the table, then we look at, really, should we be raising the price. But overall, very excited about the growth we see with Small Business.

Sasan Goodarzi
Chief Executive Officer at Intuit

One other thing that -- just amplifying what Michelle just shared, and that is our reliance on price has not changed, meaning that we have an algorithm whereby price is just an element of our overall performance. And we're not relying more on price looking ahead than we did looking backwards. So just reiterating one point that Michelle made just a moment ago.

Brad Zelnick
Analyst at Deutsche Bank Aktiengesellschaft

Excellent. Thanks, again.

Operator

Thank you. Our next question will come from Alex Zukin with Wolfe Research.

Alex Zukin
Analyst at Wolfe Research

Hey, guys. Thanks for taking the question. I guess -- so one bigger-picture kind of question, and then just one on tax. As we parse the numbers, I think the surprise factor sitting here is the guidance. And it's surprising in that it feels like it's not that conservative, I guess. And Sasan, I want to press on that a little bit. I think what you're saying is that, look, you guys have a lot of forward-looking indicators into the macro environment. And you're looking at those indicators, and they were really good in the quarter. And then I think you mentioned in your script that your guidance does not assume significant deterioration in those factors.

So I guess my first question would be, why not? And why -- what gives you the confidence to guide with that methodology? And then if you -- what level -- if you did add conservatism into the guidance for next year, where would we find it? And just tactically, maybe what is the assumption for Mailchimp growth given that variability you talked about that was a choice, I guess, in the quarter?

Sasan Goodarzi
Chief Executive Officer at Intuit

Sure, Alex. Appreciate the question. I'll say a couple of things. First of all, our approach to how we run the company and our approach to guidance and how we factor things in has not at all changed. So just know that our approach is consistent with the way Intuit has always set expectations and set guidance, which is really to deliver on our commitment. That's the number one.

Number two, what really informed our perspective as we look ahead is all of the indicators that we see that are forward-looking. But let me just, if I could double-click in, in a few of the areas. I'll start with tax to put that out of the way, which is no matter the environment, we're not going to expect nor have we seen in our history really any material impact in tax. That's 35% of the company.When you look at the other 51% of the company, which is small business, it's important to note that we are a very different company today than we were 3 years ago, much less 5 years ago, where small businesses are relying on our platform to run their businesses. It's actually their livelihood. And 80% of our revenue is subscription. And the 20% of that is transactional-based. We take the current environment and how things could play out into account as we set guidance.

And the third, which is Credit Karma and 14% of the overall company revenue, we have taken the current environment and what we assume will take place into account. And most of our verticals other than Credit Karma, in fact, have seen an impact, and we have included that in our guidance. So really, that was a long way of saying we are fairly consistent across all of our segments. And we feel very good about the indicators that we see, how we view things will play out and how that informed our guidance moving forward.

Alex Zukin
Analyst at Wolfe Research

That's helpful. It sounds like you're reaffirming a notion of diversification and exposure. I guess, maybe just a follow-up. On the tax side, on the Consumer business, when you think about -- I mean you mentioned that business is kind of much more resilient irrespective of the macro, everybody's doing their taxes. Is there any impact we should think about from recent legislation and just in general, the type of a tax season that a more volatile macroeconomic recession might -- or environment might instigate?

Sasan Goodarzi
Chief Executive Officer at Intuit

Yes. Alex, I would say nothing more than what we've experienced in the last couple of years. That's really the short answer. When you look at the last two to three years, environmentally, it has had probably more of an impact in the tax business than we've seen in years. And as you know, I've been with the company for 17-plus years, ran the tax business for three years. And what happened when we hit COVID, the implication on consumers, we extend the tax season, the child tax credit. There are so many things that played into the tax season in the last several years. And as we look at the year ahead, frankly, we view a much more simplified approach to the tax season. Although some of the tax laws will impact what we need to do in the product, that's what we're great at. That's what we know how to do well. So we actually see more normality as we look ahead than we experienced in the last two to three years.

Alex Zukin
Analyst at Wolfe Research

Got it. Can't argue with the results, guys. Congratulations.

Sasan Goodarzi
Chief Executive Officer at Intuit

Thank you, Alex.

Operator

Thank you. Our next question will come from Kash Rangan with Goldman Sachs.

Kash Rangan
Analyst at The Goldman Sachs Group

Hi. Congratulations on a super finish to the fiscal year and also a very constructive guidance. Sasan or Michelle, when you look at the -- I know you're not going to be talking about the Small Business-Online Ecosystem revenue split going forward. But it clearly looks like the business is at a point where you have two-thirds of the business coming from Online Ecosystem that's growing roughly 30-plus percent range, right? I think many of us are surprised that the outlook for that business -- you raised the overall business at 15% to 20%. So it looks like Online Ecosystem is actually doing pretty decently, right?

So in the event of a downturn -- I know, Sasan, this was a question that I've asked you on prior conference calls. But how confident are you that -- of course, retaining subs is one thing, but then adding net new subscribers in a challenging economy, how confident are you that you can keep that ball rolling while continuing to have your price increases stick, and at the same time, managing retention etc., because if retention goes down, then you have more pressure to add more new subs. So how does that mathematical equation play out during a downturn? Thank you so much and congrats.

Sasan Goodarzi
Chief Executive Officer at Intuit

Yes. Sure, Kash. Thank you for the compliment. I actually love the nature of your question. And let me hit on a couple of things. This is why earlier -- or one of the things I talked about is we are such a different company when it comes to the small business platform than we were even three years ago.

And so to your question of why do we have confidence around our guidance, and I know that it doesn't go past us that in this environment, we actually raised our long-term expectation. And it's because of just the -- how mission-critical the platform is but the services that we have. And two examples I would share with you is, when you look at the formula that we've shared, which is we're going to grow customers 10% to 20% and we're going to grow ARPC 10% to 20%, the two examples I would give is we have a set of offerings on our platform today that we didn't have before. QuickBooks Advanced, which is going after mid-market, which has much higher ARPC, 4 times the use of sort of services, is something that we didn't have three to four years ago. And we are just early in our penetration into that TAM. And in fact, we've not only seen no slowing but strengthening in this environment because folks want to ensure that they're on our platform to get paid faster to be able to take care of their employees.

And so one is, when you look at going up mid-market, when you look at QuickBooks Live, which is really an opportunity for us to lift heads and go after nonconsumption, those are offerings we have that we didn't have before that are actually higher ARPC. That's one. Two, remember, four to five years ago, our Payments business was growing 11% because of where we were on innovation in the platform. Now we're growing north of 30%. And we have about almost $2 trillion of invoices that are managed on our platform. We're growing at that rate, and our penetration is very low. And more and more customers are starting to digitize their form of payments because of the innovation on our platform, and they're already on our platform.

So we have -- and those are just two illustrative examples, but very real examples of why we're seeing the strength that we're seeing here and now, and the strength and all the indicators that we see in the coming year. And I would just sort of finish with the bank box of 80% our business is subscription business. So it's highly, highly predictable. And those are the things that give us confidence as we look ahead.

Kash Rangan
Analyst at The Goldman Sachs Group

Tremendous dissection of what is driving your confidence. And we will not let Microsoft tell us anything about SMB. We'll listen to you first. Thank you so much.

Sasan Goodarzi
Chief Executive Officer at Intuit

We are the ones to look for when we talk about SMBs.

Kash Rangan
Analyst at The Goldman Sachs Group

That's it. That's it. Thank you.

Operator

Thank you. Our next question will come from Daniel Jester with BMO Capital Markets.

Daniel Jester
Analyst at BMO Capital Markets

Great. Thank you for taking my question. Maybe just on Credit Karma and now moving Mint into that segment on an official basis, maybe we just spend a minute talking about sort of the opportunities there in a little more detail. How much can Mint drive engagement in addition to Credit Karma Money? And just over the long term, how should we be thinking about that combination?

Sasan Goodarzi
Chief Executive Officer at Intuit

Yes. Daniel, thank you for your question. We kicked off a strategy project, it's been almost probably a year ago, to just understand how we can accelerate making ends meet and our vision to truly have a consumer financial platform that can be the self-driving platform for consumers no matter where they are in their life, whether they are students or someone that is later in their life where they have achieved a level of financial freedom and have different sets of needs. And given the work that we did around our vision, we decided to bring Mint and Credit Karma together because in essence, although we have a lot of prime members as part of the Credit Karma base, Mint actually has a number of feature and functionality that the prime members need the most.

So that's number one, is bringing some of the features and functionalities together as part of the Credit Karma platform. And over time, that will actually make Credit Karma much more robust to be able to serve all kinds of members no matter what their sort of credit band is. Number two is actually leveraging the scale and the power of the algorithm, the machine learning capabilities, the decision engines that we have in Credit Karma that ultimately deliver north of 35 billion machine learning predictions per day. We can leverage a lot of those capabilities to make Mint a lot better as part of Credit Karma. So we do expect that this will be accretive in the long term, delivering benefits to members, and ultimately, truly of achieving our mission and our vision of unlocking smart many decisions for consumers. So that is our approach and thinking, and we're very excited about it.

Daniel Jester
Analyst at BMO Capital Markets

Great. Thanks. And then just a second one on Mailchimp. Appreciate all the context you provided about the quarter and the trajectory of the business. I guess, are there any learnings from the Mailchimp acquisition that you'd share that maybe will impact your acquisition philosophy going forward? And just maybe a comment on sort of what the acquisition outlook and playbook is today. Thank you very much.

Sasan Goodarzi
Chief Executive Officer at Intuit

Sure. Absolutely. Let me start with the single biggest thing that we've learned and were diagnosing. It wouldn't have changed any of what we've done. We're very, very excited about what we're going to do in executing our vision with Mailchimp and QuickBooks coming together. But it's having diagnosed upfront some of the product conversion opportunities that we are going after. I would say that's probably the single-biggest thing, that we did not diagnose as well as I would like to see us diagnose.

I would also say that's a -- if you're going to misdiagnose something, that's an okay one because it's within your control and you can address it. But I would say that's probably the biggest one. It has not at all altered the priorities that I mentioned a moment ago. But it is something that we've really gone back, and we're looking as to how we can put that in our playbook to do a better job diagnosing upfront. But in no way, shape or form does it change how we feel about the possibilities ahead, and it has not impacted our time line at all.

The second thing is our M&A playbook has not changed. Our uber goal is time-to-market. Our principles around looking at capabilities that could help us accelerate delivering our vision are unchanged. And so I would just -- I would leave it at that. Nothing new to report. It's unchanged.

Daniel Jester
Analyst at BMO Capital Markets

Great. Thank you.

Sasan Goodarzi
Chief Executive Officer at Intuit

You're very welcome.

Operator

Thank you. Our next question will come from Siti Panigrahi with Mizuho.

Siti Panigrahi
Analyst at Mizuho

Thank you. Thanks for taking my question. Great quarter. Just wanted to dig into the payment part of the business. I guess that's one of the underappreciated asset, I would say, Intuit has. You talked about total invoices now growing to $2 trillion versus last year, $1.5 trillion. Could you help us understand how you have been gaining share within that business? And also, what are the opportunity you see for Intuit payments to expand beyond QuickBooks, like some of the acquired asset? If you could share some of your long-term lease on that, that would be great.

Sasan Goodarzi
Chief Executive Officer at Intuit

Sure. Absolutely. What's great about your question, Siti, is our Big Bet 4, which is about being the center of small business growth, is really about helping our customers grow their customer base. And it's actually about cash flow, managing their cash flow. And that's where the power of Mailchimp and QuickBooks come together.

Specifically around the $2 trillion of invoices that we're now managing on our platform and your question about how do we continue to gain share, I'll start with just sharing how we've accelerated our growth from the 11% several years ago to the 30% that I mentioned a moment ago from a charge volume perspective, and it's really just basic innovation. It's around discoverability. It's around innovation like instant deposit. It's around innovation like get paid upfront, which really gives you the ability to send an invoice and get paid instantly because of all the data points that we see.

And it's just really making the experience -- auto enabling the experience for payments to always be on versus opting in. Those are illustrative examples of where we have innovated to accelerate the growth in payments. And by the way, I want to be clear, there is so much more yet to do there because when you look at the last five to six years, our team has spent probably the first half of those six years just building the basic platform capabilities to be able to innovate much faster. We have a lot of those capabilities.

Now we're able to innovate and deliver faster innovation to our customers. So that's one area where we'll continue to double down to take more share. But we also have a significant opportunity to digitize all of business-to-business. A big chunk of this $2 trillion of invoices that are managed on our platform is actually business-to-business, where it's a QuickBooks customer that transacts with another QuickBooks customer. And the opportunity that we have is that at the end of the day, you can look up that small business, send them an invoice. That invoice ends up getting -- showing up in their books, and they can pay instantly right on our rails. So that's an example of the types of things that we are working on in addition to what I shared a moment ago to really accelerate increasing our penetration and share of this $2 trillion.

And I'll just end with going back to a couple of questions that I think were asked around what gives us confidence around our small business guidance. And it's really -- this is one great example of helping customers get paid faster. It's already happening on our rails. We don't need to go acquire the customer. These invoices are being managed on our platform. Now it's a question is how do we help the customer put more money in their pocket faster, and it's sort of our right to win. And this is a great example of what gives us a lot of confidence as we look ahead.

Siti Panigrahi
Analyst at Mizuho

Sasan, that's great color. And just a quick follow-up to one of your comment on Mailchimp that you're planning to go to meet market. Can you help us understand who are the Mailchimp strength right now, maybe in the employee segment, and where you're targeting, right, that mid-market? And is it also something -- are you trying to expand your features more beyond e-mail marketing when you're trying to go into the mid-market?

Sasan Goodarzi
Chief Executive Officer at Intuit

Yes. Absolutely. I would liken -- since you and many that are listening have followed us for years, I would liken the Mailchimp journey that we are on, very similar to the QuickBooks journey. Specifically, there's a lot of overlap in the type of customers that we serve. Mailchimp generally has served the smaller small businesses, less than 10 employees. However, it actually has a lot of the capabilities to be able to serve the mid-market customers. And it comes down to adding some features and functionalities, basic things like how you do billing to actually ensure that you have the right inside sales force and customer success agents to be able to serve these mid-market customers.

A lot of what we have built and know how to build in mid-market for QuickBooks Advanced, we're doing the same thing now with Mailchimp. So it has a lot of the feature functionalities, but we're building out additional ones. But we're also building out our sales and customer success inside sales and customer success to be able to then serve those customers. And then you put that together with going to market together with QuickBooks, it really sort of brings the power of the benefits that we're able to deliver to customers and makes us far more attractive in the market for those small businesses that we want to serve.

Operator

Thank you. Next, we have Michael Turrin with Wells Fargo Securities.

Michael Turrin
Analyst at Wells Fargo Securities

Hey, there. Thanks. Good afternoon. Appreciate you taking the question. The EPS guide for the full year, it's, if not the highest, among the highest we've ever seen at 16% growth as a starting point from Intuit. You've had some questions, it's especially notable given the current environment. I think it's clear that increasing the target range for Small Business helps. But is there anything else you'd point to? Are there platform advantages you're finding with some of the newer segments? Or just anything else you'd point us towards that's helping to unlock the bigger EPS growth algorithm?

Sasan Goodarzi
Chief Executive Officer at Intuit

Yes. Sure, Michael. I'll just amplify what Michelle shared earlier. We have leverage that is coming from three places that we view is durable. One is on the technology side. And we are actually excited about having there kind of walk of you through our technology stack, our technology vision, and how it's fueling innovation and also how it's giving us margin leverage at Investor Day. But in that context, that's one significant lever where we are continuing to build services so we can build them once and use them multiple times across the company. And it's actually one of the things that is an accelerant to fueling innovation and acquisitions like Mailchimp and Credit Karma.

The second is the leverage we get from how we're building out our marketing platform so that our MarTech services can be used across all of the segments across the company. And third is the technology that we're building once and applying to all of our customer success operations, which just recall, is quite large. We have over 700 million interactions with customers. And we shifted the company years ago from every segment builds out their own operations, so we're building it once, and the segments leverage the same operations across the company. And then making sure that we ensure that those services and those platforms are used by not only across the company, but our acquisitions like Credit Karma and Mailchimp.

So the leverage is coming from technology across the company, MarTech and customer success operations. And that's what's driving what we delivered this past year, the guidance that you heard Michelle talk about and the durability that we believe we have looking ahead.

Michael Turrin
Analyst at Wells Fargo Securities

Thank you. Just a quick follow-on, if I may. Some useful commentary around mix throughout the call. With Credit Karma, you're guiding for 10% to 15% growth. It's below the longer-term targets we've seen. But clearly, there was some outside -- outsized growth there over the past year. So I'm wondering if there's any way you can help disaggregate the tough comps versus some of the macro assumptions to frame that guide in relation to the longer-term targets we've seen. Thank you.

Sasan Goodarzi
Chief Executive Officer at Intuit

Yes. Sure. Sure, Michael. It is, in fact, both. One is we have a big comp, two years of 37%, and then last year, 58% growth. And we have a lot of confidence in our long-term expectations for 20% to 25%. So that is unchanged. So yes, one element is the tough comp. But really the -- I would say the other element, probably a bigger element, is the current trends that we are seeing that we have really incorporated in our guide. When you look at our verticals around credit cards, personal loans, insurance, and then home loans, just -- and then there's the money vertical, almost every vertical has been impacted. And by the way, you can see based on our guide, the resiliency of the platform, other than, of course, the credit card vertical that really has not seen any significant impact. So that's the second piece that we have incorporated into our guidance is the, in fact, the macroeconomic environment that we see.

Operator

Thank you. Our next question will come from Brent Thill with Jefferies.

Brent Thill
Analyst at Jefferies Financial Group

Thanks. Sasan, a number of CEOs have been calling out the shift to services-based economy from a product-based. And I believe, correct me if I'm wrong, you have a heavy services base inside the Small Business. I'm curious, do you think that's helping kind of shelter the small business in this environment right now? Is that playing into some of the defensive nature of what you're seeing in the results in small business for your core?

Sasan Goodarzi
Chief Executive Officer at Intuit

Yes. It's a great question, Brent. And I think the short answer is absolutely. And there are 2 elements. I'll start with just a reminder that when we look at the small business market of sort of zero to 100 employees, about 70% of it is service-based businesses and about 30% is product-based businesses. And our really strength is in the service-based businesses.

I think the second thing I would just say is we're very, very diversified in the service-based businesses that we serve. We're not sort of overly anchored in one vertical or another. And that really helps with the diversification of not only our performance looking backwards, but opportunity as we look ahead.

Brent Thill
Analyst at Jefferies Financial Group

And when you look at Credit Karma in past downturns, can you just give us a compare and contrast? I know you've compared the small business segment to be more SaaS. You've got virtually layered services around. Is there something different that they've done in the business to diversify? Assuming things got a little worse. I'm not saying that's what you're saying to the guide, but if that was the case, what gives the defensive nature of that business?

Sasan Goodarzi
Chief Executive Officer at Intuit

The single largest, I would say, uniqueness about Credit Karma, aside from you got 100 million customers, incredible trough, high Net Promoter, 14-plus years of behavioral data where we know so much about these customers and know what they need, when they need it and how they need it, putting that to the side as a foundation, which is critically important, is Lightbox. With Lightbox, it raises certainty of the experiences that -- and offers that we can deliver members. But in this environment, more importantly, it is quality, which is there's a huge fight to quality by our partners.

So because we now have almost 70% of our credit card and personal loan transactions on Lightbox -- and by the way, growing, that's 15 points higher than it was last year, and of course, almost nonexistent years ago. And I don't even think Lightbox existed in the last recession. That is the single-biggest thing of where financial institutions have a lot of certainty when their models are part of Lightbox. So they can identify the kind of customer they want, the kind of offers that they want to provide. And of course, we make the perfect amount.

So I would say that is the single biggest thing. And it's just the scale of the platform. We are a large part of the economy providing a match between what consumers want to the financial products that they have. But I would say Lightbox.

Operator

Thank you. Our next question will come from Kirk Materne with Evercore ISI.

Kirk Materne
Analyst at Evercore ISI

Thanks very much and I'll echo the congrats. Sasan, you've alluded to this a couple of times, but I was wondering if you could just sort of dive into it in a little bit more detail. Just the power of the platform in Small Business, and as we go into a potentially soft economic backdrop, are customers starting to talk to you all about trying to consolidate on to your platform in a bigger way now? You obviously have the ability to help them address both the back office and the front office. And while we're seeing that, I think, anecdotally in payments and payroll, I was just kind of curious, given that budgets might come under more scrutiny, are you benefiting from the idea of consolidating towards one platform versus maybe taking a best-of-breed approach? Thanks.

Sasan Goodarzi
Chief Executive Officer at Intuit

Yes. Sure, Kirk. And in fact, this is probably one of the most misunderstood or least understood element of the benefit that our platform provides. And so I'll just start with stating something that I mentioned a moment ago because it really plays into your question, and that is we're not a line item on the small business' budget. We are the platform that fuels their success. We are mission-critical. Without our platform, a small business can't run their business. And so it's really important to have that frame of mind as to what's the role that we play in the lives of small businesses.

The second, to get to your question, is we now have the services that we didn't have three years ago, five years ago. And in fact, yes, they are having those conversations with us less from a can I save money, but more from a perspective of I don't want to deal with all of these different applications where things are sort of disparate and discrete where I can have everything on your platform. If I'm using somebody else's payroll or somebody else's capital or somebody else's payments, why not just use all the services on your platform.

And frankly, this is an area where our small business team is actually doubling down on looking forward, which is how do we evolve our go-to-market to actually have a conversation with our customers about all the services that they don't use, that they should use, where there'll be far more efficient, effective and potentially even save some money. Because we see all their transactions. We can see what they do if they don't do it on our platform because they've connected their bank accounts and so on. So we believe this is an opportunity as we look ahead.

Operator

Thank you. Ladies and gentlemen, that is all the time we have today for questions. And I would like to turn the call back over to management for any additional or closing remarks.

Sasan Goodarzi
Chief Executive Officer at Intuit

Awesome. Well, thank you for the wonderful questions. And we are really looking forward to seeing, hopefully, all of you, at our Investor Day at September 29. We'll, number one, walk through probably the next level of depth around the experiences that we are delivering and why in this environment they matter the most to our customers across all of our five Big Bets. And you'll have a great opportunity to not only ask more questions, but connect with my wonderful team that leads a lot of this great work. So look forward to seeing you then. Until then, be good, stay safe, and we'll talk to you all soon. Thank you.

Operator

[Operator Closing Remarks]

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