Latest / Unofficial QuickBooks Accountants Podcast / Intuit's FY 2024 Earnings

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Intuit's FY 2024 Earnings · Unofficial QuickBooks Accountants Podcast

• There may be errors in spelling, grammar, and accuracy in this machine-generated transcript. Hector Garcia: Welcome to the unofficial QuickBooks accountants podcast. I am joined by my good friend Alicia Cat Pollock, the original, the one and only Qbo Rockstar CEO and founder of Royal White Solutions. Alicia Katz Pollock: And I have the privilege of collaborating with Hector Garcia's CPA, the founder of Right Tool for QuickBooks. Hector Garcia: In this episode of the unofficial QuickBooks Accountants podcast, we [00:00:30] are going to summarize the latest earnings call from Intuit, where they have reported to the public via a couple of documents. We got a couple of summary PowerPoints. We have a 19 page sort of document highlighting all the all the things that they want the public to know in sort of summary mode that pertains to Intuit's fiscal year. So Intuit's fiscal year ends July 31st. So around [00:01:00] now when we're recording this, which is mid-August, usually is 15 to 20 days after that ending, they officially do the earnings call and they basically do a voice, um, an immersive, uh, audiobook experience of the of the financials via an earnings call. So we're going to discuss what we heard in the earnings call and what we see on the documents. Hi, Alicia. Since you're the power reader of the two of us, maybe read out loud the quoted statement [00:01:30] from Sasan Goodarzi, the CEO of Intuit. Alicia Katz Pollock: Okay, so this is directly out of the earnings document. Quote, unquote. We delivered very strong results for the fourth quarter and full year and made meaningful progress with their AI driven expert platform strategy that positions the company for durable growth in the future, said Sussan Gulzari into its chief executive officer. Our strategy and five big bets are solving our customers biggest problems as we deliver on our mission to [00:02:00] power prosperity for consumers and small and mid-market businesses. Hector Garcia: Thank you. All right. So that's sort of setting the stage. So a couple of things we can dissect from here. Ai driven expert platform. That means that we are going to this is into it right. We're going to be focusing a lot on developing AI and automating processes for our customers. But we're also going to leverage experts. And we've had conversations in this podcast about what experts [00:02:30] means to Intuit. And some of us, you know, Alicia and I have some perspective in terms of how maybe we like the way that they're labeling expert, who's the expert, who's not the expert, that sort of thing. So you want to check out a previous episode for that. But Alicia, what are your thoughts on that? Alicia Katz Pollock: Well, I want to actually back up. And, you know, if the whole document and the whole earnings report is based on the five big bets for solving customer's biggest problems, I actually want to take a minute and review those big bets. So big bet number one was revolutionize speed [00:03:00] to benefit. Our goal is to put more money in our customers pockets, eliminate friction, and build confidence every step of the way, delivering unmatched speed to benefit by accelerating with data and AI delivering fintech at the core of everything we do and innovating with emergency technologies. So that's big bet number one. Big bet number two. Hector Garcia: Wait. Hold on. That whole thing was one big bet. Alicia Katz Pollock: That was one big bet. Hector Garcia: Okay, okay. Alicia Katz Pollock: Big bet. Number one. Okay. Big bet number two. As you were [00:03:30] just saying, is connecting people to experts. Our customers biggest challenge is a lack of confidence. Small businesses and consumers alike face a broad range of problems in their financial lives, and they encounter fear, uncertainty and doubt. Their solution is to easily find and connect customers to the right experts, augment tax experts through Intuit, assist, expand expertise to new products and services. That's the. That's big bet number two. Big [00:04:00] bet number three. Unlock smart money decisions. The the customer problem. The most significant problems facing customers today are misunderstanding their finances and struggling to make ends meet. They lack a rainy day fund, carry high cost debt, and are unable to break bad financial habits. And their solutions are the reimagined Credit Karma app. Experience highly personalized financial recommendations and enable smart financial decisions powered by Intuit assist. [00:04:30] Hector Garcia: And we did have an episode where we talked about how, um, there was a user that reported that they sent an invoice to a customer and that customer's invoice contained the credit card logo under it, and it said, you can now pay this invoice installment payments by getting a personal loan to pay this invoice. That's the integration. That's the manifestation of this strategy that we're starting to see Exactly. Alicia Katz Pollock: So that that whole episode was basically big bad number three. Okay. [00:05:00] Big bet number four. Be the center of small business growth by helping them attract customers. Get paid fast access capital. Pay employees with confidence and grow in an omnichannel world. Together, MailChimp, QuickBooks, and the power of Intuit Assist will solve the biggest customer growth challenges. So that was number four. And number five might be worth. Hector Garcia: Mentioning something really quick. So that is [00:05:30] the MailChimp strategy. And if you go into the website where they actually explain the big bets, you know where Alicia is actually reading this from their reporting point 9 million. So almost a million, sorry, 0.9 million. So almost 1 million MailChimp paying customers. Holy crap. I did not realize that they had 1 million paying customers in MailChimp. I remember when they had just passed the 1 million mark in Qbo, and [00:06:00] it felt like it felt like that was the that was the turning point, you know, like 1 million customers in Qbo. This thing is for real. So I'm thinking that this MailChimp acquisition wasn't just acquiring the current MailChimp customer base. I'm thinking that Intuit has invested quite a bit on growing the MailChimp market. I don't know what what it looks like, what it looked like before, but it just I get the general feeling that they have grown the MailChimp market [00:06:30] and they're going to continuously especially we're going to find out maybe at Intuit Connect in the fall, we might find out what what is like that. What's the strategy on how they're going to get MailChimp to be mainstream? Alicia Katz Pollock: Right. Well, there's a metric here that small small business sales attributed to MailChimp, meaning from email campaigns, Panes $9 billion in sales because of email campaigns that went through MailChimp. That's pretty good. Hector Garcia: Yeah, not not [00:07:00] chump change. Alicia Katz Pollock: Right? Not not chump change. Okay. Okay. And then last but not least, big bet number five. Disrupt the small business mid-market. Many mid-market customers struggle to manage complexity using spreadsheets and disconnected apps. Roughly one third suffer through manual or offline tools and lack financial management software. So they want to disrupt the market by providing a fully integrated platform of customizable capabilities to manage and scale businesses all [00:07:30] in one place. And so that's their business to business payments, QuickBooks payments, and the whole app universe. So and the one. Hector Garcia: And the one thing that's interesting is that they're calling this a $52 billion market opportunity. And if you go through the strategy website where you look at all the sort of like market opportunity numbers, the only state, the market opportunity [00:08:00] mid-market, which actually will make you feel that we're probably going to hear the word mid-market a gazillion times, any time that we hear the word into it. Not just the word QuickBooks, just the word Intuit in general. Because, um, that's basically so basically mid-market is difficult, difficult to address because we can go to the SBA and find out what is a small business, which I believe is businesses under 25 million or under 50 employees. And then you know what a big business is, right? So you [00:08:30] know where that is. So mid-market is that gray area in between, like the big companies and the small business. And it's not very clear in like, who exactly is this, this elusive mid-market, you know, is it ten employees, is it 50 employees? Is it $25 million in revenue? Is it $100 million in revenue? And because QuickBooks doesn't really have a good product, I mean. Mailchimp works for mid market. No problem. Mailchimp is a very strong product, but. Quickbooks [00:09:00] by itself doesn't have a mid market product. The closest thing to. That is going to be QuickBooks desktop. And Intuit kind of almost pretends like. Qbo advance is a mid market product, or at least they try to posit it as. That but the reality is that we what we expect like if they are going to hit the. Mid market we do expect something between QuickBooks Desktop Enterprise. And QuickBooks online advanced to emerge in the next 3 to 6 months. [00:09:30] Otherwise, I'm not sure what the mid market strategy is because um, and we're going to get into the earnings call. And maybe that will give us a little bit more of an indication. But I just wanted to point that out because that mid market, it's a word that has bothered me for the last five years, how Intuit has used it. And it hasn't been very clear. Alicia Katz Pollock: Yeah. They've been using kind of like as a direction to go as opposed to something that they are, but they really are going that direction. Now, Hector, before you dive into all the stats, there's just one more thing I [00:10:00] wanted to say about this strategy page. With the five big bets, you can find it at Intuit QuickBooks. Slash strategy. So super easy. But when I first went to this page, I didn't realize how it was actually structured. But the five big bets, the first one, the speed to benefit is kind of the overall overarching, but then each of the other big bets is tailored towards one of their four software pillars. So the big bet two with connect people to experts was about TurboTax and TurboTax live [00:10:30] being about three. Unlock smart money decisions was about Credit Karma. Big bet for be the center of small business growth was MailChimp and Big Bet five disrupt the small business mid-market. It doesn't say QuickBooks on here. It says business to business payments, but that is the whole QuickBooks universe. So it's interesting how their strategy has now become. The five big bets have now been really railed into the four pillars of their software. [00:11:00] Hector Garcia: And that truly is a masterclass on strategy communication. It's grabbing the strengths of your business, whatever the narrative is from customers or competitors. Reframe that on its head. Build you know each pillar of your business as a strategy and then go public saying that our that the results match the strategy. It's just beautiful. It's just the whole thing is just beautiful. It just feeds into itself. It's incredible. So maybe let's go over the earnings stuff. Okay. [00:11:30] So so the this is full year reporting. So so obviously the first three quarters of the year have already been reported. So that's not new information. So they do focus on fourth quarter. But of course at the end is the aggregate that we care about. So this is fiscal year 24 ending on July 31st, 2024. And this has been reported. Number one, the revenue of the company of Intuit is $16.3 billion, which is up 13%. So very [00:12:00] important thing it's it's it's up and it's on double digits growth, which is still a healthy thing to be in the tech world. Okay. Like for example, Microsoft doesn't grow at double digits or it didn't until they started adding AI into the mix. Okay. So that's something to think about that too. Then um, then they talk about the what they're calling platform revenue. So their platform revenue is split into into three. So one is called Small Business [00:12:30] and Self-employed Group which is basically QuickBooks online. That's what it is. The second one is is QuickBooks Online and MailChimp. So sorry. So so the small business and Self-employed is QuickBooks online MailChimp. Hector Garcia: And then there's TurboTax online and then there's Credit Karma. They're calling these three the platforms now. The revenue for those four platforms combined is 12.5 billion. So essentially there's $3.8 billion missing between the 16.3 billion [00:13:00] and the 12.5 billion. And what I discovered and I had to extrapolate this from this. What they're calling non platform revenue is legacy desktop software. So so even though uh so so this is the stuff that's not on subscription. So anything that's desktop software like the tech for example the the Pro Connect uh not the Pro Connect but the the other tax software. What's it called. Lazanis and Pro series. So anything that they sold [00:13:30] more of a desktop base and not on an online web based subscription base, they're they're not calling platform revenue anymore. Which leads me to believe that what Intuit wants is at some point maybe next year or two years from now. Is that the only report on platform revenue because they didn't report what non platform revenue is like? I had to extrapolate this from this or something to to think about that too. So the overall platform revenue. So uh web based or or cloud based subscription [00:14:00] that sort of thing that grew 14%. Uh, if they look at just what they're calling the, um, the QuickBooks online ecosystem that grew 20%. So it's incredible that QuickBooks online is still growing 20%. The consumer group, which is, uh TurboTax, that grew 7%. So that's probably the least to me, is the least impressive because it shows that, um, that whatever Intuit is very good at growing QuickBooks, but not that good [00:14:30] at growing TurboTax 7% is still a great number. Hector Garcia: But it's, you know, comparatively speaking, it's not as big. And then the revenue increase in Credit Karma was only 5%, again, two, 1.7 billion. So also not chump change, you know? You know, credit karma, you know? $1.7 billion. I mean, that's that this is 10% of the revenue. So this is a pretty I mean, surprisingly, I didn't know Credit Karma could make so much money. But it's the is the is the area that's grown the least. And this is and this [00:15:00] will lead me to believe that what Intuit wants to do is they want to figure out how to insert Credit Karma into a lot more of their products and plugs and integrations. So I think we're going to see a lot of Credit Karma a lot more, a lot, a lot, lot, lot, a lot more. And what you know what? You know what I'd like to see, Alicia. Honestly, QuickBooks doesn't have a good personal finance app if you think about it. I know you loved mint when mint existed and a lot of people liked quicken. And that's and there's a there's a one app called [00:15:30] You Need a Budget, which is really, really cool. And then there's all these apps that come out. You see all the commercials and TV that allow you to figure out what subscriptions you're paying duplicate and really get you out of pain. Dual subscriptions, which could be a shot in the foot for into it because everything they sell is on subscriptions. Hector Garcia: But I think that's where the market opportunity is for Intuit. And they didn't they didn't mention this. And I'm not in the know how. And maybe we're stepping on a landmine without knowing Alicia where this is actually happening. But we actually [00:16:00] don't know. I'm telling you, we don't know. But I think the opportunity is to create a personal finance app. And Credit Karma, of course, will will be the engine driving revenue behind that because they can make that free. You know, Intuit can afford to create the best personal finance app, a replacement to you need a budget, a replacement to the for the old mint, a replacement for quicken. And because they have the revenue driving mechanism through Credit Karma, they could build the best personal finance app in the world. And and if they make it so, a 15 [00:16:30] year old, a 16 year old can start using it from the very beginning. You know, where maybe there is some social aspect to like making wise money decisions where, you know, we make it cool to make wise money decisions, which is the opposite of how kids think nowadays. Intuit can can grab for the next 25 years all those young people that recognize Intuit the brand and then grow into being business owners and that sort of thing to get the rest of the stuff. So something to I just thought that was interesting. Do you have any thoughts on that? Alicia Katz Pollock: Yeah, I would absolutely love to see [00:17:00] a personal finance come back into the picture, but they they have so many different platforms that they could base it off of. And I haven't looked into the money app recently to see how that has evolved, but they've got all the makings of a personal finance platform. And what you're saying about Credit Karma, we've seen them offer loans through QuickBooks or through or there's a line of credit section that shows up in some files that's not active yet. And I think they're they're [00:17:30] building the mechanism for financing that when they're looking at your data because they can see your data, although when it's aggregated It's an anonymized. I'm always going to get that word wrong. Anonymous when it's aggregated, but they can still look in your file and see they can do your, um, your credit worthiness just by looking at your file. And so if they're seeing that you're having cash flow issues, they will offer you a offer, [00:18:00] you a loan or a line of credit, as long as the terms are good. I am all for making it easy so that I don't have to spend hours researching what is the best rates from the best bank for a line of credit or a loan? If that takes that effort away from me and the rate, the terms are solid and agreeable, I'm totally okay about baking Credit Karma into QuickBooks. Hector Garcia: Yeah, or into the entire Intuit ecosystem, of course. Now, this other thing, [00:18:30] I thought it was pretty interesting. In August 2024, Intuit renamed the Small Business and Self-employed Group to Global business solutions group. Okay. And accompanying that, they've reported that their international revenue, their international online revenue grew by 13% this year. So you have a growth in international revenue. You have a renaming of the Small Business Self-employed Group to Global Business Solutions Group. What this I think what this [00:19:00] means is that QuickBooks will once again try to become more of a global company. And this is interesting because very recently, I would say for the last 3 or 4 years, we've seen them close up shop in France, close up shop in India, close up shop. I forget wherever else. But you know, beyond the Anglo English speaking markets, which is US, Canada, UK, I believe, um, New Zealand and Australia [00:19:30] is kind of one market and then South Africa. So across from those markets, Intuit has tried to expand, especially in India, was probably the biggest, uh, try for an expansion because a combination between the, the, you know, selling QuickBooks in India and also the Indian based, you know, developers and the Indian based support center. Hector Garcia: So it's like sort of a combination of things. But they didn't shut that down. They shut down the the sales portion. So so there's no QuickBooks India anymore. And there used to be a QuickBooks India. [00:20:00] There is a QuickBooks global or a QuickBooks international. And that one is supposed to is generic. It works across all countries. It you know, it doesn't doesn't have any specific tax laws built in. But if you understand the mechanics of the value added taxes laws, you can custom build them in this international version of QuickBooks online. So something to mention. Um, because I'm also like literally recording as we speak. I'm recording. Intuit hired me to record a, uh, [00:20:30] How to Get Started with QuickBooks online for the international market. So I have to open a new QuickBooks Online International account. Play with it. Understand how it's different than the US version, and create a tutorial with the same level of smoothness that I do with the US versions for the international version. So and so they're investing in that. So that leads me to believe that they're continuing to invest in growth in international markets, which I think is great. Alicia Katz Pollock: Yeah. Since business is now increasingly [00:21:00] global and globalized, I think that's really great that they are working to make the international version more robust and more well known. I mean, people don't even know where to find it. There's a specific link that you have to use to get to the global version. And then you say which country you're in in order to get started with it. Or at least the last time I checked, it's been a while since I popped in to check it out, so I'm looking forward to seeing your course and knowing what the distinctions are. Hector Garcia: So the other [00:21:30] piece here, the other part of the reporting is the tax stuff Okay. So the consumer tax group, which is TurboTax, grew 7%, as we mentioned, to 4.4 billion. The TurboTax live revenue grew 17%. Okay. Um, and and that's a really important piece because they've actually reported TurboTax online units to go down. So they actually had less customers [00:22:00] filing tax returns in. Uh, not that much. We're talking about like 1%. Right. So it's not a big deal. Um, actually 2%. So yeah, 2% reduction on the total number of TurboTax online units. But you had a 17% growth in TurboTax live. So it's possible that Intuit might be shifting to less people filing tax returns, but more average revenue per customer, which might mean that might focus more in higher value, uh, tax type [00:22:30] of transactions, which could potentially signal a TurboTax becoming a more pronounced competitor to the professional tax preparers. Because, you know, historically, professional tax preparers don't want to do $100 tax returns. Okay. They say you want $100 tax return. Go to TurboTax. But now TurboTax is investing enough in with TurboTax live where they want more of that average revenue per client, which means they have to go up the echelon [00:23:00] on the average earning of the person that they're targeting, and also not just target the individual, but target the individual. That's a business owner and their businesses. Et cetera. Et cetera. Alicia Katz Pollock: So I want to be clear and just make sure I'm clear on the distinctions here. So TurboTax online is the website where the user can file their taxes. Correct. Turbotax units is the downloadable software which, you know, barely. You know, people aren't buying that way anymore, but TurboTax live is [00:23:30] when they're actually working with you to file your taxes on your behalf. So they're actually they have a professional role, correct? They're acting as the role of the tax preparer for you. And so that's why the online units is declining because it's few. Fewer people are trusting themselves to do it themselves. And they are leveraging the tool to have the assisted tax where they provide all the information and TurboTax actual people are doing their tax [00:24:00] returns. Hector Garcia: Well, I'm not sure if that's exactly how it's framed and that maybe we'll leave that open to interpretation, but I think that the units in millions has to be the total Social Security numbers. Right. So individual people. Right. Social security numbers or tax IDs. So, so the TurboTax federal unit. So they're not counting the state. Just just the the IRS stuff had 35.4 [00:24:30] 4 million units. That means 35.4 individuals or businesses if they. I don't know if TurboTax does business. I think it does. Um, so it's 35.4 units. This is like tax payers. And this actually went down by 2% from the previous year. And it doesn't say it went down because we are counting the TurboTax live revenue as as as different. What I, what I think is that they just have less customers, but they, they, they're growing the revenue with less customers [00:25:00] by increasing their average revenue per customer. Alicia Katz Pollock: And the assist as well. Hector Garcia: Right. The assist the live and the assist. I think it might be in the same category. Okay. Okay. So credit karma. So Credit Karma grew up by 5% as we mentioned to 1.7 billion. Um, and essentially it's driven by the strength of auto insurance personal loans, credit cards and Credit karma money, which I don't know what that is. You know what credit card my [00:25:30] money is? Alicia Katz Pollock: I do not let me go do some fast research. Hector Garcia: Okay. Um, so that's that's pretty much that's the that's the reporting in summary. Then they talk about the the forward looking guidance. So this is their projections for the future. So for for fiscal year 2025. So this will end July 31st 2025. They are projecting the revenue to grow another 12 to 13%. So they're kind of keeping the same pace. And of course you know if you're the CEO of a of a public [00:26:00] company, you you don't want the stock to plummet. You're going to project about the same growth as the previous year. Otherwise the stock will go down. So I'm not sure. Again, projections are projections. I don't know what spreadsheet they built to to get these these numbers and the the operating income. The profit is going to grow to approximately 4.7 billion, which is 28 to 30% growth, increase in profitability. So fiscal year 2025, [00:26:30] yes, it will have 12 to 13% revenue growth, but it will have 30% profitability growth. So so strap onto your wallet because Intuit is going to figure out how to make their stuff more and more profitable, which maybe they do it through cost reduction. We saw recently a big layoff. So maybe they'll do it that way. Or maybe they'll do it through price increases in any way. We just had a price increase like two months ago, so I'm hoping that at least one for a whole year, there's no more [00:27:00] price increases. But what you could see price increases on the things that are not obvious, like QuickBooks Online and MailChimp have their obvious monthly subscriptions, but things like Credit Karma and loans like you don't, you won't see the price increase because it wouldn't be published per se. It would just be based on the profitability of their deals. So it's kind of something to to, to think about. And, and they are projecting a higher growth in Credit Karma 5 [00:27:30] to 8%. So. So 100%. We have strong, uh, thoughts that they will be focusing deeply on on growing, that. Alicia Katz Pollock: I have the answer about Credit Karma money. It is a fintech banking through Credit Karma that gives you a checking account and the ability to raise your credit score. And so it's a way of getting like you can direct deposit your paychecks into there, get your paycheck up [00:28:00] to two days early. Um, federal benefits, um, transaction fees, a credit card and a 5.1% APY. So it's even higher than QuickBooks checking because they're calling it Credit Karma Money. I'm curious. I haven't looked yet, but there was a separate money app that you could download from the App Store on your iPhone. And so I'm wondering if that has been morphed into a Credit Karma product. Hector Garcia: Well, what I know, like if you actually go and search [00:28:30] QuickBooks money and credit card money, QuickBooks money says business banking and credit card money says personal banking. So I think that's how they're branding it, where it's both a digital bank. It's both. You probably have digital credit cards. It's both probably some sort of high yield, um, um, envelope system or, or savings account option system. But it looks like QuickBooks money is what they're leading with for business banking and Credit [00:29:00] Karma money what they're leading with for personal banking. So let's jump to the financial summary. And we're going to go through segment revenue. Because I find that to be sort of the more interesting piece of this. We already talked about um, the 18 billion I mean the $16 billion in revenue. But we're going to talk about the segments. So the way, uh, Intuit reports their segments, as we mentioned, is they report the what they're calling the online [00:29:30] ecosystem. That's kind of like one segment. So that segment is 6.8 billion. So this is a podcast I'm going to start throwing numbers at you I apologize. It's probably the worst thing you can do, especially if you're driving. But you know we're reporting on it right. So QuickBooks online ecosystem is $6.8 billion. So $6.8 billion. And it was 5.7 in fiscal year 23. Hector Garcia: And it was 4.4in fiscal year 22. So QuickBooks online ecosystem [00:30:00] the highest growth segment in in Intuit. And it's obviously the most important one QuickBooks online. That's why we have a podcast about it. Now. There's what they're calling the desktop ecosystem. And this stuff is really, really interesting. The desktop ecosystem is $2.6 billion. And last year it was 2.2. So they actually grew pretty significantly the revenue from the desktop ecosystem. Now, is it possible [00:30:30] that there's a lot less desktop customers? Yeah, they probably is. But they're paying a whole bunch more money and they haven't lost any revenue, even with all the butchering that they've done with QuickBooks Pro and QuickBooks Premier and kind of like moving, pushing people into QuickBooks online. So this leads me to believe that QuickBooks desktop was sort of always highly and deeply underpriced because people are still paying for QuickBooks desktop, even at the much higher prices, which is bringing into [00:31:00] it a net increase in revenue, again, 2.2 billion versus 2.6 billion. So that's pretty significant growth. So the combination of those two, the QuickBooks desktop ecosystem and the QuickBooks online ecosystem, that combination, it's a total of 9.5 billion. So essentially a little bit more than half of the total revenue. So like 60% of the revenue. It's QuickBooks. So Intuit the majority of Intuit's revenue is QuickBooks, period. Hector Garcia: Then we have consumer, which I mentioned before. [00:31:30] This is a TurboTax 4.4 billion, Credit Karma 1.7 billion and pretax, which is six, um, 600 million. And that makes the $16 billion that were reported. And then when you look at platform revenue, you see, um, the this small business and self-employed group, which is now called the Global Business Group, which is um, one of the platforms TurboTax, Credit Karma and the combined platform revenue is 12 billion. We still [00:32:00] have that $4 billion that they're not counting platform, which essentially is the QuickBooks desktop ecosystem. Uh, and, and the pro tax. So like pro tax, which is um Lazanis and Pro series and QuickBooks desktop, that's not part of the platforms, even though desktop has according to their report and their call, which is pretty significant. And they made up sort of a big deal out of this, which is they have successfully and I'm [00:32:30] doing quotes successfully completed the transition to subscription in their desktop business. So even though which I find this interesting, even though all of the desktop products are successfully again quote successfully transition into um, into subscriptions, they are still sort of counting it out of what they're calling platform revenue. So I'm not sure what to what to make out of that. Uh, any thoughts on that? Alicia Katz Pollock: Yeah, [00:33:00] I mean, that makes sense for why there's growth in desktop revenue, because up until 2021, most people would buy one copy of QuickBooks desktop and use it for three years. So just by going to subscription based, they're going to triple their revenue. And then the the differential between the growth that they did succeed versus triple would be the fall off between desktop moving migrating to online. So all the numbers make sense with that paradigm, right. Hector Garcia: But it's also since [00:33:30] you mentioned in potential growth in revenue in the desktop stuff, they did mention that they're expecting a reduction in revenue on the first fiscal quarter, which is August through August, September, August through November of 160 million. But somehow in the second quarter, they expect any increase in desktop revenue. So I'm going to make the assumption that what happens is that they're what they're projecting is a lot of people [00:34:00] probably got into subscription of desktop at some point in, at the very beginning of the year, in the last three years, and they're going to see a huge sort of uptick on on revenue coming in as people renew their subscriptions on the first, on what they're calling the second quarter of Intuit, the first quarter of the fiscal year. Do you have a different thought on that? Alicia Katz Pollock: I have a different thought about that. Um, in at the end of September is when they're discontinuing pro and premier. And so the people who need [00:34:30] to stay on desktop are going to be forced to move to enterprise. And so that is I think, where the fall off is predicted. And then the growth is. Hector Garcia: But wouldn't that increase. Wouldn't that increase revenue if they're going to enterprise wouldn't that increase revenue. Because I find that to be. Alicia Katz Pollock: Well you're going to you're going to have the initial fall off while it's not available. And then the shift as people migrate to enterprise. Hector Garcia: So so what you're saying is they're thinking [00:35:00] that between August and September, there's going to be a whole bunch of confusion about like what platform to use. They'll go to desktop. They'll go back. There's just going to be so much chaos that that that, that QuickBooks is projecting. You know, we're probably going to lose $160 million in revenue. But they know stabilize itself in December, in January. Okay. That's interesting, I like that, I like that. Well, I mean, there's a obviously we can go deep into like the numbers and stuff like that, but I think that's good enough to give you a general idea on kind of like what's going on in the world of of [00:35:30] Intuit. Now, one thing to kind of mention, if you actually look at the stock, you know, at the very beginning of the year into its stock was at $603. And they were they were recording this, which is mid-August. The stock is at $618. So Intuit's stock market performance has been pretty flat in general. Like I you know, there hasn't been something Uber exciting that has happened about it. But if you actually go back five years, five years, the stock was at $278 [00:36:00] and now it's at, you know, $600. So obviously in the last five years the company has more than doubled. And if you go like backwards in time, when I first became a ProAdvisor, I jokingly say that when I became a ProAdvisor, which was around September of 2008. Hector Garcia: Uh, the stock was at $31. And look at it now. So I look at the history of Intuit from the moment I became a ProAdvisor. And which is interesting enough, I became a ProAdvisor around the same time that, um, [00:36:30] that the past CEO, Brad Smith, became the CEO as well. So I jokingly told him, I go, hey, by the way, you know what happened in 2008? That changed into its perspective. And he thought it was going to say that he became the CEO. I said I became a ProAdvisor and he and he laughed and he kind of said, you're right, you're right. Totally right, 100%. So it was actually pretty funny. So but the past year, yeah, it's been pretty flat the stock market. But you know, you can't but deny that, you know, for the last ten years or so I mean the company has literally [00:37:00] uh, ten x its value. And the peak of Intuit was, I think at some point during the like the pandemic where all the stocks were were, sorry, post pandemic, where there was a huge rally and it was almost at $700. And I'll, I'll confess that I bought some at that and I'm kind of regretting it, but I also have bought some at 30 when I first started, and I bought some at 100 something and 200 something. So I'm still kind of positive, but I'm hoping the stock goes keeps going up because I am a stock holder. Alicia Katz Pollock: That peak is really interesting [00:37:30] because during the pandemic is when a whole lot of people said, why am I working 9 to 5? Why am I grinding now that I've had some time off to do some soul searching? Or maybe because I lost my job, let me go ahead and pursue my passion in this business, or this talent, or this interest that I've always had and turned into a business. And so that's where that spike came from. And then some of those businesses continued to succeed and grow. And then some people went, okay, that was fun. Back to work. [00:38:00] And so that's I think part of what that spike up and drop was about. Hector Garcia: Yeah. And one of the things Alicia and I were talking in prior where like they have these things called Investor Day, which is I think is like an event. And you physically go there and you shake hands and they talk about that. I want to go to Investor Day. How do you go to Investor Day into it if you're listening to this? Um, can you send me an email and tell me how do I go to Investor Day? I would love to go next year and hang out with you guys and maybe speak my mind [00:38:30] about some of your decisions that you've made. But, you know, I've, you know, I'm a stockholder. I would love to go to Investor Day. I would love to know kind of how that works. I find that to be potentially really interesting. Alicia Katz Pollock: Yeah, I. Alicia Katz Pollock: Love I would love an invite to I mean, I consider my the work that I'm doing right here with this podcast part of increasing my stock value. So I've got I've got a vested interest. Hector Garcia: Yeah. True. Very true. Like we want to you know, although sometimes we're brutally honest about stuff. The reality is we're just trying to help accounting professionals navigate [00:39:00] the all the information that gets thrown at them. And sometimes the information comes with misunderstandings, or sometimes it's set in a way that maybe only favors the company. And sometimes the software gets released with a weird concept that doesn't make a lot of sense. And we, you know, we try to do the yin yang, you know, the bad and the good, and we're just trying to help you as much as possible, really. Alicia and I are helping ourselves. Just kind of, like, figure these things out, like half, half of the value out of this podcast. We get [00:39:30] it individually just by having sort of a venue to, like, vent with each other and, and talk about these things. So hopefully you guys also, um, also feel that and I think it's worth mentioning that we have an email and in the show notes you can ask us or comment or like if the podcast has helped you or if if you disagree with something, we would like to start reading those emails if you allow us to, and maybe answer those questions, live in the in the in the podcast. [00:40:00] So that's something that we also are going to be um, proactively looking at. So go in the show notes, check out the email, anything that we mentioned, you know, like videos or websites or documents, we're going to put it in the show notes. Any of the stuff that Alicia is doing in terms of the course, the courses that she's teaching, we'll put that in the show notes. If you hear me talk about my app write tool or my conference reframe, that's going to be on the show notes. So like take a look at the show notes, take a look at all the additional resources we add in there. And again we welcome [00:40:30] your your email messages as well. Alicia Katz Pollock: Yeah, I also want to give a shout out to our sponsors and a special thanks to them. The links to the sponsors in our show notes usually have either discounts or special special contact information for you. And we couldn't do this without our sponsors. So please show our sponsors some love. If you hear an ad that is an app that actually would solve a problem for you, please go to the link, follow through and check [00:41:00] it out. Hector Garcia: Absolutely. Well, with that being said, we'll see you in the next one. Alicia Katz Pollock: See you in the next one.