Intuit CEO Sasan Goodarzi joins Yahoo Finance’s Brian Sozzi at the Goldman Sachs tech conference to discuss the outlook for small business and personal finance software demand amid macroeconomic headwinds.
JARED BLIKRE: Welcome back. Now to a company well-versed in the needs of small businesses and individuals at difficult economic times. Initially conceived as a personal finance platform, Intuit has grown into a $100 billion-plus software group, and a highly acquisitive one at that. Yahoo Finance’s Brian Sozzi sat down with its CEO at the Goldman Sachs Tech Conference and began by asking him where he sees demand. Take a listen.
SASAN GOODARZI: Our platform helps small businesses grow their business and run their business. What matters most to small businesses is they got to get customers and they have to be able to manage their cash flow. And so now, with QuickBooks and Mailchimp, in one place, we can help them grow.
And we’re very mission critical to the livelihoods of small businesses. We are not a line item on their budget. We are the reason that they thrive, the reason that they can grow as a small business. So we’re continuing to see very strong demand there.
And you know, 35% of our company is tax– both our consumer and pro-tax. And good times or bad times, it’s a great opportunity to serve customers. So we’re excited.
BRIAN SOZZI: None of that sounds recessionary.
SASAN GOODARZI: Well, it’s not. Taxes– one of the things I talked about at earnings is 51% of the company’s small business, 35% is, tax and about 14% is Credit Karma. And with small business, we’re mission critical. 80% of the business is subscription-based.
With tax, good times or bad times, people have to do their taxes. And so it’s really almost recession-proof. And Credit Karma, in tough economic times, that’s probably the one element of the company, which is about 14% of the company, that can be more prone to economic headwinds or tailwinds. But that’s why we have a portfolio. We serve consumers and small businesses. And we’re able to manage the company in great times and in tough times.
BRIAN SOZZI: Is that one of the things that investors still miss about the Intuit story– you have a lot of recurring revenue.
SASAN GOODARZI: We do. In fact, it’s a lot of the questions that I’m getting today. And one of the things I’m reminding folks of is we are highly reoccurring business. We are 80%-plus subscription. And what we do matters.
I mean, we help people with their money. We help businesses with managing their cash flow. And so what we do matters. And in tough times, people rely on us even more than in good times. And it is an important reminder– people don’t live in our world every day, but it’s a highly predictable business.
BRIAN SOZZI: How is the business different– and you got this question, I think, in the last earnings call, I thought it was just an interesting answer– how is Intuit different today compared to the last recession? Last just crisis, I would say?
SASAN GOODARZI: Yeah, I would say we’re so different than even from four years ago. If I talk about from to, we were really a company that focused on tax and accounting– very important problems, big problems for consumers and small businesses. And when we declared our strategy and the five big batches for the company, the shift that we were making is, how do we become a platform company that can have a meaningful impact in your life every single day to truly power your prosperity?
And so what’s different is we’re no longer just about tax and accounting. As a small business, you really rely on us to be able to grow your customers, to retain your customers, to manage your cash flow. And if you’re a consumer, it’s no longer just about taxes.
I can help you manage your money and even get early access to your refund when you do your taxes with us. So just a huge from to. And as I said earlier, because we’re a highly recurring business, we’re just more predictable now than we were even five years ago or 10 years ago.
BRIAN SOZZI: I was thinking back just to covering Intuit, and I remember sitting at my desk two times going, wow, Sasan made another acquisition. You’ve been quite the dealmaker– Mailchimp, Credit Karma. Are you looking for other deals? You have to be salivating at the opportunities out here, given where valuations have come down.
SASAN GOODARZI: It’s a question I get a lot. I would say, first and foremost, Brian, we are so focused on our customer problems. When we refreshed our strategy, we said, we want to be a company that helps customers make ends meet. We want to be a company that helps fuel the success of small businesses.
And it just so happened that Credit Karma and Mailchimp were two companies that propelled us forward 5 to 10 years. So our M&A principles don’t change. It’s the same as it was 10 years ago.
But when we shifted our strategy, not only did we have to accelerate our organic innovation, but we felt like these two companies could help us, 1 plus 1 equal 11– and that’s what we’re seeing. And it’s exciting.
BRIAN SOZZI: Are there other areas you see yourself or you see Intuit playing in that you’re not in now and you want to be in?
SASAN GOODARZI: For us, there’s no destination. The ultimate mission that we have is we want to power the prosperity for consumers and small businesses. And we want to be a company where when a consumer uses us, they can double their household savings rate.
If a small business is using us, we want their success rate to be 100%. We want our platform to be one of the key reasons why they succeed. And those are actually big goals that we’ve set for the company. Beyond our stakeholder goals that we set, we’ve actually set a goal of if you use our platform, we want to double your household savings rate. We want to increase the success rate of small businesses. And we will go to no end to have a platform that achieves that outcome.