Intuit Investor Day 2019 – Greg Johnson


– Alright, let me start
by taking a look back at the never to be
forgotten year of last year. That was the year of tax reform. It was a year of government shutdown. It was a year that not
only were we launching and scaling TurboTax Live as a platform, it’s the same year that we launched and scaled our Turbo
Mint platform as well. It’s the same year we had a CEO change. It was quite a year. And when I look back at last year, look at our report card, just a simple reflection of how did we do during such a time of
I call it a turbulence. So our goals were to extend, to transform, and to disrupt. First we wanted to extend our lead in DIY. Extend our lead in DIY. Well, that means that
we grow the category, that we grow our share. Did customers love their experience and decide to stay with us? So did we improve our retention? And fundamentally in a
year like tax reform, it’s so important that we grow our filing particularly our totally free filing, did we achieve that? And the answer is yes to all those despite the year that we went through. In terms of transforming
the assisted tax category, again I mentioned we scaled
our virtual platform, we feel good about that. We delighted customers and our pros on both sides of that platform. As a matter of fact we actually grew the number of new filers by 3X that came from a prior
year assisted tax method. Strategically it’s a very important point because that tells us that
we’re on the right track to transforming the assisted category and penetrating the TAM that is there. Now what about disrupting
consumer finance? As I mentioned we scaled our virtual consumer finance platform which is a platform that
connects consumers to partners so that they can improve
their financial health. We introduced 2 1/2 times the
number of marketplace offers, we’ve grown our monthly active
users now to four million, and in fact we have over 37 million consumers on our consumer
finance platform. All that was achieved last
year and we feel very good about what that means on
the path that we’re heading. The scoreboard ultimately comes down to did we deliver the revenue growth? If you recall, we raised our expectations
around revenue growth, and we delivered 11% revenue growth as well as 7% TTO customer growth as well. So a pretty successful year
during very turbulent times. And from there that’s the last I wanna do of looking back at that year. We survived it and we’re
pretty proud of our results. The rest is gonna be looking forward. Looking forward. So first of all when we look forward, it always starts in the same place. And you’ve heard it time
and time again today, it starts with our customer problems. It’s so easy to read, and particularly for us in this room, to hear our customer problems and actually relate to the severity of those problems. When we talk about making ends meet, maximizing your tax refund, trying to save more,
trying to pay down debt, trying to improve your financial health, I mean that sounds like
pretty meaty problems. But when you sit down
in a customer’s home, as we routinely do, and
you’re in their environment, and you hear their stories about what keeps them up at night, the things that they worry about, the things that they wish for, what’s getting in the way of their success and their happiness, it’s truly compelling, and we know that we have an opportunity to make a difference in their lives. That’s why falling in
love with the problem and not the solution
is so important to us. One example of this is that one mindset change that
we’ve undergone recently is after over 30 years
in the tax business, figuring out how to maximize
the customer’s tax refund, what we’ve discovered
through the same process, that maximizing the tax refund isn’t just about making it bigger, it’s also about how do
you maximize the impact that refund can have on
their financial life. And this is when you start to realize the opportunity to follow
the customer problem has taken us to an area of
growth where we can extend our impact from tax to
actually beyond tax. Now we find that inspiring which brings us to how we in the consumer group support Intuit’s mission of powering
prosperity around the world. What we fight for everyday is we fight for financial
freedom from our customers, not just by doing tax
but moving beyond tax. And the way that we’re going
to achieve that bold goal is becoming an AI-driven expert platform which you’ve heard a lot about
is the key to the success in how we can make a
dent to making an impact in the lives of our customers. Now that platform sits on top of an amazing ecosystem, an ecosystem that starts, if you look around the one
or two o’clock position, with 50 million unique filers. These are filers that we
have amazing relations with, and that relationship is expressed digitally in the form of data, and that data is something
that is our customers’, and our data stewardship principles and our focus on building trust are key for us to think about how can we tap into this ecosystem and drive amazing breakthrough
benefits for our customers. Those 50 million unique
filers also give us 82 billion dollars of opportunity to put a bigger refund in their pocket. 82 billion dollars of refunds
we’re responsible for. Beyond that is not just the tax business, our payroll business is an ecosystem where we’re actually delivering payroll and paycheck to
over 14 million workers, and those paid workers amounts
to 180 billion dollars, 180 billion dollars of paychecks
that sits in our ecosystem. We also have over 600,000
tax experts and pros that serve in the assisted market and generate tremendous benefit and tremendous value
to both the accountant as well as the customers
those accountants serve. And then finally we
also have partnerships. We have partnerships with
financial institutions. And we’ve talked about the 95% coverage but we also have over
20,000 financial partners that we connect with in
a very meaningful way to deliver benefit. And we’ve introduced Turbo and Mint as a consumer finance platform that all sits within our ecosystem. And with that ecosystem connected with being an AI-driven expert platform, we can do some amazing things. So let’s talk about how
we’re gonna apply that in order to win in order
to make a difference in the lives of our customers. Our first objective is to
extend the lead in DIY. Extend the lead in DIY means that we wanna revolutionize
the speed to benefit. We wanna revolutionize
the speed to benefit which is related to getting
to a taxes are done experience with no friction and no effort. And to do that, we’re gonna leverage data and artificial
intelligence-driven experiences in order to remove that
friction as we build confidence. That’s how we’re gonna
extend the lead in DIY. We also intend to transform
the assisted category to penetrate that 20
billion dollars of TAM and to address needs of our 86 million assisted filers that currently
are filing with others. We’re gonna do that by
connecting people to experts and connect those experts to people in effect building a
virtual workforce platform that from that platform
we’ll be able to add tremendous benefit to our customers’ lives specifically and probably primarily getting to a taxes are done experience with complete confidence. That would be revolutionary in the market. And we’re starting to see those results. This will transform the way
people think about doing taxes. We’ll talk later about the TAM and why that’s so significant, but that’s the second
part of our strategy. Our third objective is to disrupt traditional consumer finance. Obviously when you hear
about those results, the pain points that exist
and that have been around for our customers for forever, whatever is going on in the system, the financial system isn’t
working on their behalf, it’s just not working. We can do better. Our intent is to take the assets we have in our ecosystem, our capabilities that we derive from being an AI-driven expert platform and put that to work for our customers. So we are creating a platform which essentially is a marketplace that’s driven by connecting our customers to financial partners and institutions that are able to deliver amazing benefits that help them re-engineer
their financial life. That’s our third objective. And eventually when we get to, these become more mature, we see opportunities in that ’cause this is a global problem, it’s not just a US and Canada problem. Now before we go further
into that strategy, let’s set a little context around the industry that we compete in. We’re gonna start with the
view of the tax industry. So in the tax industry,
we show this every year, and you’ll see this past year there’s 155 million IRS tax returns. Our goal is to focus on growing our share of those total IRS returns rather than focusing on just
the do-it-yourself space. This is another example
of a mindset shift. We said we fall in love with
the problem, not solution. And the problem that we
fell in love with for years was maximize your refund and enabling you to do your taxes yourself
’cause that was so important. But the reality of it is
there’s over 86 million filers out there that don’t
wanna do their tax themselves. Their problem isn’t about ease, their problem is about lack of confidence. Our responsibility as a category champion is to grow the category, to grow the number of filers that can leverage technology to have effortless experience and one they have total
complete confidence that they got the biggest refund possible and that refund they put to
work in their financial life to deliver the maximum benefit. So the responsibility of championing the growth of the category as I think about this
year looking forward, number one there are four
things to be the focus on. There still is gonna be a lingering effect and impact from tax reform, the confusion, questions,
and opportunities. And so it’s important
for us to not forget that and to make sure that
we as a leadership brand will continue to provide
the access to assistance to help people navigate that change and start to re-optimize
their financial life. The second thing we need to do is because we’ve launched
this new hybrid category and we expect competitors
will continue to develop, potentially follow the
approach that we’re taking, it’s important we drive awareness of that, we improve that experience, and we continue to make
dramatic innovative improvements for both the pros as
well as our customers. The other thing that
we’re driving as you know we’ve talked a lot about
AI-driven experiences. The reality of it is we can deliver on a taxes are done vision, we can deliver that once we start to leverage the ecosystem we have, the AI-driven experiences
that we can bring to market and deliver a much more
personalized tax experience. We believe that will help us
drive growth in the category. And then finally our
ability not only to focus on the average customer,
the average consumer, but think about the
fastest growing segments that are underdeveloped for us, self-employed, our Latinx customers, even some of our millennial,
emerging millennial investors. Those kind of segments,
when you get closer to them, you see unique opportunities to solve some of their problems uniquely in a way to drive category growth. So that’s how we view the landscape and how we intend to grow the category. One thing that’s another
big opportunity for us to grow our business is
to optimize our funnel. So what you see in our funnel here is that we have 99 people that visit us, 99 million, thank goodness, 99
million people that visit us, however, however, many of
them, only 42 million or so, go on to actually truly
consider then file with us. This last year was 45 million. When you think of those
that actually file with us, only 32 million of those
actually go on to complete. So what’s important on the funnel is that we need to figure out how
to drive more traffic, we need to figure out how do we actually drive greater consideration,
more conversion, greater levels of retention
and greater levels of delight. The good news this last year is that we’re able to grow
our retention by two points, but there’s still opportunity
for us to optimize the way the experiences of our customers. That’s one way to grow is by optimization. The other way to grow
is for us to innovate and penetrate underdeveloped markets, in this case it’s the TAM related to the assisted consumer tax market, the 20 billion-dollar opportunity, where we today currently only have about 28% share of the returns and only 12% share of the revenue that actually happens in that category. We see opportunities to penetrate that category with TurboTax Live and significantly increase our share of both returns as well as revenue. The other part of the growth strategy goes into how do we think about growth. When you look at the total on the right, what you’ll see here is
that we have a history, we have a history where
we’ve accelerated recently our ability to innovate at the high end, to innovate the high end by going after underserved customers where I like to say is where complexity lives
and friction still exists. That’s at the higher end of the market. And as we develop better solutions like TurboTax Self-Employed coupled with QuickBooks Self-Employed, that enables us to
penetrate and drive growth at the higher end of the market. But also importance of it is that we grow in the
lower end of the market, that we serve those problems
and those pain points that we’ve talked about. We’ve done that with innovating around our totally free offering that we started years ago. And our ability to not only grow that but grow that at accelerated rate as we innovate the top end of the market allows us to have a steady increase and an accelerated expansion of ARPC or average revenue per
customer or per return. So the thing I want
you to see here is that I’ve learned over the seven
years that I’ve been here that to be successful in this business, you can’t walk, you have to run. You have to run hard, you have to run hard towards innovation, and we’ve learned how to run
and chew gum at the same time. So with that, we’ll transition
to what does that look like as we apply going forward. So extend our lead in DIY tax prep. I shared with you a lot of the numbers in terms of the opportunity, but what about the proof points? Are we making progress? We feel good about our progress. Number one is that we’ve
added over two million new self-employed filers
and Latinx filers last year. We’re proud of that. Yet we see a significant
opportunity to grow. The other thing we’re
proud of is this last year we had over 13 million filers that paid us absolutely nothing. 13 million filers that
paid us absolutely nothing which is two million more, a two million increase
over the prior year. Why do we care about that? We care about that because those filers, they haven’t paid us anything, however they have big problems, they have big opportunities, and so therefore it’s a very
important part of our market, and we’ll talk a little bit
later of how they fit into our strategic lens of the
market, view of the market. So beyond that, one of the
things that we mentioned before is AI-driven experiences, when
you apply it the correct way, you can actually reduce
the time it takes to file, you can reduce the friction. We’ve done that with 8% of our filers that can file in less than 30 minutes. And we have many filers in our platform that could actually file in a much faster period of time, below 15 minutes. Beyond that we actually have in DIY by applying personalization
to our experiences, we’ve increased our
retention by four points over the last two years. Four points, pretty significant
given that opportunity. And then finally as we
pursue AI-driven expertise in order to personalize our experience, we now have 52% of our
self-help answers personalized. I think the last time was around 30%, we shared that with you. We’re making progress. We’re making progress. We can extend our lead
in this core business by revolutionizing the speed to benefit. Transforming the assisted category. Again 20 billion dollars of TAM, 86 million consumers that actually prefer expertise and
are seeking out experts, and we have an opportunity to make and transform that experience. Over 10 million of those
assistance seekers, they churn between
filing methods each year. 10 million. There’s an opportunity
to develop and deliver a better experience, a better solution. The proof points, we’re
early in this journey, too early to conclude
that we’ve got it all cracked and figured out. We have opportunities to
improve the experience. However we have doubled the
number of self-employed filers on our TurboTax Live platform. We have a 4X increase on
the number of Latinx filers now filing on our TurboTax Live platform. 70% of the new filers that we’ve grown came from a prior year
assisted tax method. So we’re growing the category, we’re bringing new users. This is a two-sided platform. One of the big things we
focus on is our ability to improve both the consumer experience and the pro experience at the same time. We saw a 52% increase in our
Pro NPS versus the prior year. That means we’re making
our pro experience amazing, and why that is important
is because when a customer who needs assistance
connects with our pro, we see their conversion
rate go up by 32 points. 32 points, that’s dramatic increase. So what’s our goal? Our goal is to make sure our pros spend more time connecting
with our customers rather than navigating
the back office elements of trying to be a pro on our platform. That’s what we focused on last year, and by doing that, we’ve
increased our net promoter, and they actually spent much
more time serving customers. Disrupting consumer finance. That ambition is earlier, it’s very early in that journey, but we know we feel compelled to actually have to extend our relationships beyond just tax. How can we do that? First of all we do process and deliver 82 billion dollars in refunds. We have 180 billion dollars
of paychecks that we issue in our ecosystem through QuickBooks. We now have 37 million
registered users on our platform, four million who are active. Now we’ve just gotten started. We’re 18 months into this in earnest. The opportunity is massive. The proof points that
we’re making progress are pretty impressive as well. Whenever we actually personalize an offer by prequalification, we see a 10X improvement in conversion. A 10X improvement in conversion. Whenever we personalize an offer, not just by pre-qualifying but actually enable consumers to pre-fill on our partner platforms, what you see is a 5X
increase in account creation. That’s our partner benefit. So ultimately we also have
expanded our partners. Now we have over 39 partners, whether it be for credit cards, whether it’s for lending,
whether it’s for mortgage, 39 partners that we partner with to deliver consumer benefit, and that’s now over 100 plus offers that we’ve put in the market. Now I mentioned we’re
early in the journey, but by maniacally focusing
on the customer problem and leveraging our ecosystem
and our capabilities to do good for our customers, we can actually deliver amazing results. So let me put this all together ’cause we’ve shown the pieces but it’s not like it’s
three separate businesses. The reality when you
serve 50 million filers, every single filer has their own journey, and that journey looks
different year to year. And if you wanna know how
these things fit together deliver customer benefit and
what’s the revenue model, the business model that supports all three of these strategies together, I wanna walk through a
few of these examples just so you can see
how the pieces connect. In this example you have Emma
who’s a recent college grad, and she’s gone into the workplace and she’s become successful. She’s becoming more and more successful, and as she starts to become
more and more successful, she decides to get into investing. And with investing she joins TurboTax and she moves up from
being a Deluxe customer to now being a Premier customer. And actually because of that, she also cares a little bit more about getting priority access to experts, and she cares a little bit more about things like Audit Defense so she actually adds our MAX bundle. That next year she’s actually
become more successful, her life become more complex, and she’s now signed up
TurboTax Premier Live. So now she’s looking for
that live assistance. And because she’s trying to find ways to maximize her income
and her monthly balances, she decides to go ahead and
refinance her student loans. You can see her lifetime value for us increased dramatically in each year, and that’s just one of the stories. There are other stories
here that are very similar. When you actually look at Tracy, she paid us absolutely zero dollars. She was one of those customers that we said pay us absolutely nothing. So in her first year that was the case. Even in the second year she did not pay anything
to us from filing taxes, however since she doesn’t
have a checking account and she wants more access
to her money faster, she put all of her
deposit on her Turbo Card. And then that next year, not only that, she’s gotten married, her and her husband now
filed itemized deductions, so now she’s in Deluxe, and then they go collective together to actually go through and
find a better credit card in order to manage
their personal finances. The stories go on and on and on. These are three of the stories, but I’ll tell you there are
over 30 million of those. And those stories create massive opportunity for a win win win. We can win by helping the customers achieve what they’re looking for, we can win by helping
our financial partners achieve what they’re looking for, and ultimately our shareholders as well. So with that, the last
thing I’d like to reiterate is that we shared last last year our forward-looking guidance, our long-term expectation
is for us to continue to deliver somewhere
between eight to 12% growth. I’ll remind you last year was 11%. And we’re excited about
the progress we’re making.

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