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Beau
Conference Operator
Good afternoon, ladies and gentlemen. My name is Beau, and I will be your conference operator. At this time, I would like to welcome everyone to Intuit's fourth quarter and fiscal year 2024 conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer period. If you would like to ask a question during this time, simply press star then the number one on your telephone keypad. If you would like to withdraw your question, please press star two. With that, I will now turn the call over to Ms. Kim Watkins, Intuit's Vice President of Investor Relations. Please go ahead, Ms. Watkins.
Kim Watkins
Vice President of Investor Relations
Thanks, Beau. Good afternoon and welcome to Intuit's fourth quarter fiscal 2024 conference call. I'm here with Intuit's CEO, Sasan Ghadarzi, and our CFO, Sandeep Arjula. 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 2023, 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 statements. 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. And with that, I'll turn the call over to Sasan.
Sasan Ghadarzi
CEO
Great. Thank you, Kim. And thanks to all of you for joining us today. We delivered very strong results for the fourth quarter and full year and made meaningful progress with our AI-driven expert platform strategy and big bets that position the company for durable growth in the future. Our full year revenue grew 13% and we delivered strong operating margin expansion, demonstrating the strength and momentum of our investments and innovation. As we exit the year, we're confident in delivering another year of double-digit revenue growth and margin expansion in fiscal year 2025. Intuit is a global AI-driven expert platform that is powering prosperity for consumers, small and mid-market businesses. Our strategy and five big bets position Intuit as a mission-critical platform that delivers end-to-end solutions, driving sustained growth. We made an early bet on AI. We have a significant advantage with the scale of our data, investments in AI capabilities, such as knowledge engineering, machine learning, and gen AI, and our large network of AI-powered virtual experts. This is enabling us to disrupt the categories in which we operate. We are transforming how we serve our customers by delivering done-for-you experiences, where we do the hard work for them, connecting them with AI-powered human expertise to fuel their success. With the introduction of GenAI, we're now delivering reimagined customer experiences and bolstering businesses' growth potential while driving efficiencies in how work gets done within Intuit. This has enabled us to build a large AI-driven expert platform to fuel the success of consumers, small and mid-market businesses. The progress we've made has bolstered our confidence, leading us to accelerate investments in five key areas within our big vets to deliver greater impact in the future. I'll spend a moment unpacking the progress we've made and our investment plans for the future. First, within Big Bet One, we're delivering done-for-you experiences with Intuit Assist. In fiscal year 2024, we made strong progress making Intuit Assist, our Gen AI-powered financial assistant, available to millions of consumers and approximately one million small and mid-market businesses. We're accelerating our investments to roll out Intuit Assist at scale in the coming year. Second, within Big Bet 2, we are accelerating platform and go-to-market investments for TurboTax Live and QuickBooks Live, embedding AI-powered experts across our business offerings. In fiscal year 2024, TurboTax Live revenue was 17%, and full-service customers doubled, while those customers new to TurboTax tripled. QuickBooks Live customers more than tripled. We expect our accelerated investment in these areas to deepen our penetration in a very manual, high-priced, and disaggregated assisted categories. By digitizing how services are delivered, an integral part of our done-for-you platform experiences, we will become the AI-powered financial assistant for consumers, small and mid-market businesses. Next, within Big Vet 4, our money solutions. We're making additional investments to accelerate digitizing the experience end-to-end for consumers, small and mid-market businesses, from estimate to invoicing to getting paid and paying bills. In fiscal year 2024, the total online payment volume we facilitated on our platform grew 20%. We also helped small businesses access $2.4 billion in financing through Cookbooks Capital, up 28%. And we made significant progress digitizing B2B payments with our bill pay offering, for which monthly payment volume process quadrupled over the last six months. In fiscal year 2025, we expect these accelerated investments to deliver best-in-class, seamless payments, capital, banking, bill pay, and invoicing solutions. Next, within Big Bet 5, we're doubling down on mid-market with additional investments in the platform and go-to-market motions. In fiscal year 2024, QBO advanced customers grew 28%. In fiscal year 2025, we're accelerating investments to better serve customers who have more complex needs, such as more sophisticated accounting and reporting requirements, business intelligence, money solutions, human capital management, professional services, and customer acquisition solutions with MailChimp, all assisted by AI-powered human experts. And finally, accelerating international growth with Mailchimp and QuickBooks. We've translated the Mailchimp offering into five different languages for markets where we see a large TAM. Looking ahead, we're bringing QuickBooks and Mailchimp together to create a single growth platform, differentiated in the markets where we have product market fit, including in Canada, UK, and Australia. In other geographies, we're leading with MailChimp's strong international footprint to help small businesses get customers as we continue to localize the offering. Wrapping up, with the progress and momentum we are delivering and the accelerated investment areas I've shared, we are in a great position to win as an end-to-end platform with experiences that fuel the success of customers. Intuit is the AI-driven expert platform that is powering prosperity for consumers, small and mid-market businesses. With that, now let me turn it over to Sandeep.
Sandeep Arjula
CFO
Thanks, Hasan. We delivered very strong results in Cisco 2024 across the company, including total revenue growth of 13%, GAAP and non-GAAP operating margin expansion of 40 and 100 basis points, respectively, and GAAP and non-GAAP EPS growth of 24% and 18%, respectively. Our fourth quarter results include Revenue of $3.2 billion up 17%, gap operating loss of $151 billion versus gap operating income of $17 million last year, reflecting a restructuring charge of $223 million recognized in the quarter related to the organizational changes we announced in July. non-gap operating income of 730 million versus 627 million last year up 16 percent gap diluted loss per share of seven cents versus diluted earnings per share of 32 cents a year ago also reflecting the restructuring charge and non-gap diluted earnings per share of 1.99 versus 1.65 cents last year up 21 percent turning to the business segment In the small business and self-employed group, the revenue grew 20% during the quarter and 19% for the full year. This momentum demonstrates the power of a small and mid-market business platform and the mission-critical nature of our offerings as customers look to grow their business and improve cash flow in any economic environment. Online ecosystem revenue grew 18% during the quarter and 20% for the full year, driven by our progress serving customers with more complex needs and adoption of our ecosystem of services. As a result, online ecosystem ARPC grew 11% in Cisco 2024. 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 17% in Q4 and 19% in fiscal 2024. Growth for the quarter and year was driven by customer growth, higher effective prices, and makeshift. we delivered growth in our declared strategic areas this year with our emphasis on serving customers with more complex need this focus drove u.s qbo customers excluding self-employed up 11 qbo advanced customers up 28 while qbs self-employed customers declined 14 resulting in total online paying customers up six percent second we continue to focus on connecting the ecosystem Online services revenue grew 19% in Q4, driven by payments, payroll, capital, and Mailchimp. For the full fiscal year 2024, online services revenue grew 21%, driven by payroll, payments, Mailchimp, and capital. Within payments, revenue growth in the quarter reflects higher effective prices, ongoing customer growth as more customers adopt up payments offerings to manage their cash flow, and an increase in total payment volume per customer. Total online payment volume growth in Q4 was 19%, relatively consistent with the range we've seen over the last several quarters. Within payroll, revenue growth in the quarter reflects an increase in customers adopting our payroll solutions, higher effective prices, and a mixed shift towards higher-end offerings. MailChimp revenue growth was driven by higher effective prices and paid customer growth. The revenue growth continues to be impacted by the lapping of a larger benefit from price and lineup changes that we made last year in Q2 and Q3. Third, we continue to make progress expanding globally by executing our refreshed international strategy, which includes leading with both QuickBooks Online and MailChimp in our established markets and leading with MailChimp in all other markets as we continue to execute on our localized product and lineup. On a constant currency basis, total international online ecosystem revenue grew 11% in Q4 and 13% in fiscal 2024. Turning to desktop. We successfully concluded the three-year transition to subscription model, which contributed to 25% desktop ecosystem revenue growth in Q4 and 16% revenue growth in Cisco 2024. QuickBooks desktop enterprise revenue grew in the low 30s in Q4 and in the high teens for Cisco 2024. Our Q4 desktop ecosystem revenue growth also reflects the offering changes we made in early fiscal 2024 to complete the transition to a recurring subscription model. These changes resulted in approximately 60 million of desktop revenue recognized in Q4 and approximately 50 million recognized in the first three quarters of fiscal 2024, all of which would have otherwise been recognized in Q1 of fiscal 2025. We also expect approximately $50 million of desktop revenues that would have otherwise been recognized in Q1 in fiscal 2025 to shift to later quarters in fiscal 2025. In total, these changes lower Q1 fiscal 2025 revenue by approximately 160 million and are largely related to a more frequent product update beginning in Q4 fiscal 2024 to align the customer delivery experience to our subscription model. Accordingly, we expect Q1 desktop ecosystem revenue to decline approximately 20% for Q1, but for desktop ecosystem revenue to return to growth in Q2. Overall, we expect desktop ecosystem revenue to grow in the low single digits in fiscal 2025. Turning to Credit Karma. Credit Karma revenue growth improved each quarter during fiscal 2024, from a 5% decline in Q1 to a 14% growth in Q4. On a product basis in Q4, auto insurance accounted for six points of growth, personal loans accounted for five points, credit cards accounted for two points, and credit card money accounted for one point. Full year revenue was $1.7 billion, up 5%. We are pleased with the momentum driven by a relentless focus on what matters most to our members and partners. We made strong progress this year redesigning the Credit Karma app to enable members to see much more of their financial life and find the product right for them. We also introduced IntuitAssist to deliver personalized financial insights using data and AI, increased monetization in the under-penetrated prime segment, and made it easier than ever for consumers to benefit from the Credit Karma and TurboTax product integration. I am proud of the progress the team made innovating on behalf of our members and partners. Switching to consumer and pro-tax groups. Consumer group revenue of $4.4 billion grew 7% in fiscal 2024 as we continue to revolutionize how taxes get done for consumers and small businesses. TurboTax Live revenue grew 17% and customers grew 11%. Full-service customers doubled while those new to TurboTax tripled. We are pleased with the momentum we saw with TurboTax Live again this season. Turning to the pro-tax group, revenue was $599 million in fiscal 2024, up 7%. In summary, I'm pleased with the continued momentum this fiscal year and our opportunities ahead. Shifting to a balance sheet and capital allocation. Our financial principles guide our decisions. They remain our long-term commitment and are unchanged. We finished the quarter with $4.1 billion in cash and investments and $6 billion in debt on our balance sheet. We repurchased $255 million of stock during the fourth quarter and $2 billion during fiscal 2024. Depending on market conditions and other factors, our aim is to be in the market each quarter. The Board approved a quarterly dividend of $1.04 per share, payable on October 18, 2024. This represents a 16% increase versus last year. Moving on to guidance. A fiscal 2025 guidance includes Total company revenue of $18.16 billion to $18.347 billion, growth of 12% to 13%. Our guidance includes the revenue growth of 16% to 17% for the small business self-employed group, including online ecosystem revenue growth of approximately 20%, and desktop ecosystem revenue growth in the low single digits. Our guidance also includes revenue growth of 7% to 8% for the consumer group and 5% to 8% for Credit Karma. Gap diluted earnings per share of $12.34 to $12.54, growth of 18% to 20%, and non-gap diluted earnings per share of $19.16 to $19.36, growth of 13% to 14%. We expect a GAAP tax rate of approximately 23% in fiscal 2025. GAAP guidance reflects an expected 24 million restructuring charge related to the reorganization we announced in July. Our guidance for first quarter fiscal 2025 includes total company revenue growth of 5 to 6%, including small business and staff employed group revenue growth of 6 to 7%. reflecting the revenue shift in Q1 resulting from the desktop offering changes that I noted earlier. We expect desktop ecosystem revenue to decline approximately 20% in Q1, and the online ecosystem, which is our growth catalyst, to accelerate to approximately 19% growth in Q1. For Credit Karma, we expect revenue to grow in Q1, and for consumer group and pro-tax revenue to decline in Q1 as we are lapping the period a year ago that included the extended California tax filing deadline. GAAP earnings per share of $0.61 to $0.66 and non-GAAP earnings per share of $2.33 to $2.38. GAAP guidance reflects an expected 19 million restructuring charge that we expect to incur in Q1 related to the reorganization we announced in July. You can find our full fiscal 2025 and Q1 guidance details in our press release and on our fact sheet. I will now shift to our long-term growth expectations for each of our business segments. First, small business. With the momentum we see in online ecosystem growth, we are reiterating our long-term revenue growth expectations for the small business and self-employed group of 15% to 20%. As part of this, we continue to expect online paying ARPC growth of 10 to 20%, and we now expect online paying customer growth of 5 to 10%. This reflects our shift in emphasis towards ARPC as we scale mid-market, drive growth in services, and reshape how we go to market as one business platform to significantly increase adoption of all our offerings. While there are relatively fewer mid-market customers, the ARPC of mid-market QuickBooks online customers is nearly three times higher than other QuickBooks online customers. Turning to Credit Karma, we are excited about the opportunity ahead as we execute our strategy to more deeply penetrate our core verticals, scale in growth verticals, and execute our consumer ecosystem strategy. With the learning from operating in the current business cycle, we are updating our long-term revenue growth expectations to 10% to 15%, reflecting the current size and scale of the business, and as we focus on creating seamless end-to-end experiences with TurboTax that benefit consumers year-round. Finally, the consumer group. Based on the momentum we saw this season and the significant runway we have ahead to penetrate our TAM, we expect assisted penetration to be the key driver of future growth. TurboTax live revenue accounted for approximately 30% of consumer group revenue in fiscal 2024, and we expect it to become the majority of consumer group revenue in the coming years. With that context, While we are scaling assisted, we are adjusting the consumer group long-term revenue growth to 6% to 10% in this interim period, with TurboTax live revenue expected to grow 15% to 20%. One final note before I wrap up. Starting in Q1, we will be changing the name of our small business and self-employed group to Global Business Solutions Group. This new name better aligns with the global reach of the Mailchimp and QuickBooks platform and our focus on serving both small and mid-market businesses and our vision to become the end-to-end platform that customers use to grow and run their businesses. With that, I'll turn it back over to Sasan.
Sasan Ghadarzi
CEO
Great. Thank you, Sandeep. We are confident in our long-term growth strategy, including double-digit revenue growth and operating income growing faster than revenue. We have the strategy to win given the green shoots we're observing and we're less than 5% penetration of our $300 billion in TAM. We have a massive runway ahead. We look forward to seeing all of you at our investor day next month where we'll unpack all of this and more. Let's now open it up to your questions.
Beau
Conference Operator
Thank you, Mr. Ghadarzi. Ladies and gentlemen, at this time, if you would like to ask a question, please press star then the number one on your telephone keypad. If you would like to withdraw your question, please press star two. Also, please limit yourself to one question. We'd like to get to as many people as we can. We'll go first this afternoon to Sidi Panegrahi at Mizuho.
Sidi Panegrahi
Analyst at Mizuho
Great. Thank you. If one question, then, Sasan, I'll focus on small business segment. Nineteen percent growth is pretty good in this environment where we are hearing about SMB weakness. But I want to focus on your growth in fiscal 25 and beyond. Now it looks like your focus is now driving growth through targeting mid-market. You talked about that and renamed that. So help us understand how big is that opportunity to expand into a mid-market, and why is this the right time for Intuit to increase focus on mid-market, and is it mostly targeting your QuickBooks customer base, or are you planning to gain share from other vendors?
Sasan Ghadarzi
CEO
Thank you for your question. First of all, I want to start with our focus will continue to be small businesses that are formed because we want to fundamentally continue to grow with them. With that as context, we've just simply doubled down on our focus on mid-market. As you know, it's not new. This has been five years in the making. It's one of the five bets that we declared more than five years ago. But I would just say five years later, Citi, we are just building an incredible amount of momentum. With that as context, let me just now answer your question. One, the way to think about it is we now have a business suite. And our business suite provides all the capabilities for a business to be able to grow their customers, manage their customers, be able to manage their cash flow, get their accounting done all in one place. And with our really AI-powered innovation and AI-powered experts, We really have tilted the professional-grade help and services to all of our businesses. And we are now at a place where we are really accelerating on two fronts. One, we are going to go to market as one platform versus pieces and parts to really accelerate services penetration because the one thing we continue to hear from businesses is that they want to do everything in one place, and now we have the business suite for them to do everything in one place. Secondarily is our acceleration in mid-market. We're actually excited to announce at Investor Day a platform that will take us even further up market. And that really positions us to not only grow with our customers, but to really acquire new customers. I would just remind us that the majority of mid-market customers are non-consumption. And they pay a lot of money to use multiple different apps, discrete apps that don't talk to each other. Excel spreadsheets, Google Sheets, shoeboxes, and paying for multiple different bookkeepers, marketing agents, and ultimately accountants. And now we have packaged all of that as one enterprise suite to be able to pursue and accelerate pursuing mid-market customers. And our ultimate goal is to go far beyond 10 to 100 employees. And so I think this is five years in the making. And to round out the answer to your question, this is both focusing on the smaller customers, but we're really doubling down on the larger customers and really being able to penetrate services. And that's really what gives us confidence in the 20% online ecosystem revenue growth at a far bigger scale that you heard from Sandeep, along with our acceleration in Q1.
Sidi Panegrahi
Analyst at Mizuho
Thank you. I look forward to hearing more at the investors' day.
Beau
Conference Operator
Thank you for your question. Thank you. We go next now to Alex Zukin at Wolf Research.
Alex Zukin
Analyst at Wolf Research
Hey, guys, thanks for taking the question. I wanted to ask about consumer, the guide for the coming year, the updated midterm guide. If you can just walk through a little bit of the puts and takes where, you know, why was that the right place to start the annual guide? What could drive upside surprise as the tax season progresses? And maybe, Sasan, just your view on kind of the macroeconomic backdrop that that consumer guide is set against.
Sasan Ghadarzi
CEO
Yeah, absolutely, Alex. Thank you for your question. Let me start with the last part of your question, which is around the macro environment. You know, we have not assumed anything other than the current environment. We're not assuming any tailwinds coming from the macro environment. So that's really been one of the elements that's informed our guidance. It's really about our current trends that we're seeing, our current momentum that we're seeing, and really all focused on our own execution. So that's really the first part of your question. I would say the second part is, just as a refresher, the total tax market is about $35 billion in TAM. $5 billion of that is do-it-yourself, and about $30 billion is all assisted, but consumer and on the business side. We've got great momentum. As you know, TurboTax Live grew 17% this past year. But the number of full-service customers that we got doubled, new to the franchise tripled. And so we have a lot of momentum as we look ahead. And that's why we have a lot of confidence in really providing an expectation that we expect TurboTax Live to grow between 15% to 20%. And that really leads to we wanted to just adjust our long-term expectations to be really prudent because until TurboTax Live, which today is 30% of our franchise, a growing high double digit, until that becomes a larger part of our franchise, we wanted to be prudent with our long-term expectation. I will just end with saying that DIY is actually very important, and I would parse it into two. One, we're actually growing quite rapidly, and I would say high single digits with complex customers with higher income, and we're actually accelerating taking share. And based on our learnings this year and based on our tradeoffs that we made this year and our focus this year, we're going to be quite assertive in continuing to pursue lower-income customers this year because we have a lot of green shoots from this past year with our experiments of how to deliver benefits and monetize beyond tax with our Credit Karma platform. And so we're going to be leaning into that. And I'll just end with – The final aspect of the question that you asked really are upside to our guide, which is, I think, a question you asked around TurboTax comes from really two dimensions. One, accelerating in assisted tax beyond the 15% to 20%. And two, actually accelerating where we've seen a lot of green shoots, which is the more complex higher income customers that are DIY. We have positioned ourselves for the innovation and the lineup that's required to win on both fronts in the coming year. So that's where our confidence comes from.
Alex Zukin
Analyst at Wolf Research
Perfect. Thank you, guys.
Beau
Conference Operator
Yep. Thank you, Alex. Thank you. We go next now to Brad Zelnick with Deutsche Bank. Thank you. Great. Thanks so much for taking the question. Sasan, I wanted to ask about the restructuring, which I know you take very seriously. We appreciate it wasn't motivated by cost savings, but rather to better position the company ahead. How are you thinking about reinvesting any savings as it takes time to staff back up to prior levels? Are there specific initiatives the dollars get allocated to? Any additional color would be great. Thanks.
Sasan Ghadarzi
CEO
Yeah, sure, Brad. You know, first of all, I just want to start with acknowledging, you know, we are a culture about talent and people and compassion and care. And this is a very, very tough decision. And we took great care of our teams internally, both those that are staying and getting them excited about why we're doing this and what's in the future. And they remain extremely energized. But secondarily, taking great care of those that were impacted. And I just wanted to start there because these things, are hard for us. We take it very seriously. We also believe that it's critically important to position the company for the future. And as we communicated, which is really the plan that we're executing against, and a lot of what my upfront comments were, we are really taking all of the dollars and reinvesting it in five areas, which I articulated earlier in my prepared remarks. And really our intent is to put all of those dollars back in the five areas that we've seen a lot of green shoots in this past several years. They accelerated towards really the latter part of last fiscal year, which is hence the decision to really double down in those five areas. So our intent is to allocate all of those dollars to those five areas. And, of course, it's spread across marketing, customer success, and additional engineering headcount in the areas that I mentioned. And we expect, by the way, there's no expectation of any of these paying off in the coming year. None of our guidance that we've provided resides on the added headcount back end. This is really positioning us for the next two, three years plus. That's an important note for all of you to know because there's really no risk to our execution plan as we think about the coming year, but really this is about positioning us in the future. I'll just end with the following. We have a lot of confidence with the margin expansion that Sandeep articulated, and not only from the platform leverage that we're getting, but from all of our AI investments internally to drive a lot of efficiency and productivity.
Sandeep Arjula
CFO
Brad, the only thing I would add is we didn't have a standing start as we made that announcement. We were already contemplating, as you probably saw from our open job listings, those had increased over the last quarter. We started building out our mid-market go-to-market function as well as scaling our marketing activities, particularly as we go after the assisted tax category, which has a different marketing timing than the DIY category.
Beau
Conference Operator
Thanks, Sandeep. Look forward to seeing you guys at Investor Day. Thank you. We look forward to that as well. Thank you. We'll go next now to Brent Phil at Jefferies. Brent Phil at Jefferies Thanks. Sasan, when you think about the Mailchimp re-acceleration, what do you need to put in place to enable that to get to the level you'd like to see?
Sasan Ghadarzi
CEO
Yeah, there are really three areas that we've been executing that are worth calling out that we're excited about. One is the integration with the QuickBooks platform. As I mentioned earlier, one of the biggest areas why we're able to accelerate our customer growth with U.S. QBO, customer growth of 11%. The QBO advanced to 28%. is really creating a suite where our platform is all in one place. So that's one area that we are aggressively focused on data and tech integration and, of course, workflow integration. And we're making great progress on that front. That's number one. Number two is mid-market. That is an area where it was critical when we declared the acquisition of MailChimp. We're building momentum, both, by the way, what we're doing to integrate the offering, but also our go-to-market capabilities. As we announced, I think, last quarter, Greg Johnson is now back with Intuit. He runs all of our go-to-market capabilities. for all of small business, and we've brought together our sales and marketing and customer success across Mailchimp and QuickBooks to be able to be better positioned for mid-market. And then last is international. Those are the three areas that we're very focused on, and when we look at our KPIs, we're making solid progress against those three areas, and that's one of the reasons why it leaves us excited about the coming year and the future.
Beau
Conference Operator
Thank you. We go next now to Keith Weiss at Morgan Stanley. Thank you guys for taking the questions, and congratulations on a really solid quarter. I wanted to ask about the acceleration in QBO into Q1. We've seen two quarters of deceleration in both the QuickBooks online subscriptions and the online services. The confidence in the acceleration, is that based upon like price increases or is there something you're seeing in units or other parts of the business that are giving you guys confidence in guiding towards an acceleration for Q1? As a follow-up, you talked a lot about where the reinvestment of the dollars or the heads from the headcount reduction came from. Can you give us a little bit of visibility of where those heads came out of? What are the parts of the business that you guys are paring back investment in?
Sasan Ghadarzi
CEO
Yeah, great. Thank you for your question, Keith. I'll start with your first question. Really, our acceleration comes from three areas. One, acceleration in services, and this is services across payments, across payroll, across our live platform, and what we expect in MailChimp. So that's one key area. The second key area is mid-market, where, as we shared earlier, We've seen very good traction with QBO Advanced, and we've really continued to build out our go-to-market efforts and our platform capabilities. And that's informing, by the way, what we're seeing in Q1, but also the fact that we shared earlier that we expect our online ecosystem revenue to be 20%, which is what it was this past year. And the third is price. Those three play a big role in our acceleration. And the thing I would just call out on price, everything that we really learn and hear from our customers is because we have a business suite in one place, They're actually saving time. They need less labor. They're able to drive customer growth based on our capabilities and better manage their cash flow because we're digitizing their cash flow. And that plays a very big role in terms of just the pricing power that we have, especially in our higher-end SKUs. But those are the three things that give us confidence into Q1 and beyond. And as you know, the majority of this business is subscription-based, so it's very predictable. In terms of your second question, where did the heads come from in terms of the restructuring? There were really several key areas. I would say the largest area is, we looked across the company, and we looked at talent that we felt there was an opportunity for better performance. This was about 8% of our talent. These are, by the way, very talented folks. will land great opportunities elsewhere. But it was across the company. It was not from any particular area, which, by the way, why there's really no execution risk from the action that we took, because this wasn't from one area. This was from across the company and talent that was we believe we have an opportunity to upgrade talent. So that was really one area. The second is we really consolidated some of our technology talent across multiple sites, closing down Boise and Edmonton and consolidating technology talent in our key areas, Tel Aviv, Bangalore, Atlanta, and Toronto. But those, I would say, were the main drivers of where the restructuring came from. And then, of course, we're allocating all of it to the five areas that I mentioned earlier.
Sandeep Arjula
CFO
The only thing I would add, thank you to Sasan's first part of that question. If you recall in my prepared remarks, I talked about QBO, U.S. growing 11%, advanced growing 28%. These larger customers tend to adopt and use services at a higher rate than the self-employed. The decline from that's an important attribute to keep in mind. And secondly, on pricing, we look at pricing very carefully, price-volume mix, and well over half of our growth comes from volume and mix. And at the company level, the contributions for price are relatively consistent year over year, while they are slightly higher in the small business group. So that's the second component to keep into mind as you look at the trajectory heading into Q1.
Beau
Conference Operator
Super helpful. Thank you, guys. Thank you. We'll go next now to Cash Rangan at Goldman Sachs. Cash Rangan Thank you very much, team, for a nice finish to the fiscal year and quite positive on the guidance too. Son, I couldn't help but notice that your small business self-employed group is now running at the rate of $10 billion, I think as of this most recent quarter, 10-ish. Very few companies in software, in the enterprise software market, hit that $10 billion. And congrats, you're there. You've done it with finance accounting for the most part. You've got payments and payroll. So this puts you on track with service. And I believe also the $10 billion business is going a little bit faster. And you're moving up market. Your SKU mix is decidedly more advanced and less of lower value units. So this has been, at least from my perspective, more successful. $10 billion in revenue, one of the largest enterprise software companies in the world. So having come this far, where else could you go with this business? And I'm glad I'm not asking you a tax question. Thank you so much.
Sasan Ghadarzi
CEO
Thank you for the question, Gash. And also, by the way, the setup. You know, as you saw in our guide, we're guiding our global business solutions group to be north of $11 billion, growing 16% to 17% in the coming year, and particularly with online growing at 20%. And I would just tell you all of that has been done without really much, I would say, massive contribution from mid-market. The best is yet to come, because we are going to continue. If you look at where we are today versus three years ago, we truly have a business suite where we have all of the key capabilities for a business to be able to grow and run their business. We've been investing in the last five years to be positioned to go after mid-market. And our ultimate goal is to have all of the big brand names be on our mid-market platform. And we will announce something I think you will find exciting at our investor day that really positions us to be able to serve these larger customers. And that's really, when you look at the future, when we look at the future, where we get really excited is that we're actually at where we are with an incredible franchise without really having a significant contribution from mid-market. And that's what excites us about the future because we want to continue to serve smaller businesses, but we now have a real opportunity to win in mid-market. And I would remind us of the following. It's probably the most important point that I'll make. Mid-market, when it comes to financial management platforms, is actually not a crowded space. And so we have an incredible right to win. And this is really precisely what we hear from accountants and from mid-market businesses. And we're really excited about the next chapter of, you know, taking our business group from, you know, we're $10 billion today to, you know, much larger as we look into the next three to five years.
Alex Zukin
Analyst at Wolf Research
Thank you, Siddharth. And 10 on to 20. Thank you.
Beau
Conference Operator
Yeah, indeed. See you at Mets today. Thank you. We'll go next now to Kirk Maturne at Evercore ISI. Yeah, thanks a lot. My congrats on the quarter and the upbeat guidance in the next year. I guess, Hasan, my question comes around the global business solutions group. How are you thinking about Intuit Assist's impact on that in the coming year? Where is that in the integration process? I'd just be curious about how you see that you know, empowering your customers, maybe growing, you know, helping in areas like mid-market or attach rates and some of your other products in that area. So I wanted to just answer that, you know, discuss Intuit Assist on the small business side. Thanks.
Sasan Ghadarzi
CEO
Yeah, Kirk, thank you for the question. First of all, let me just start with we haven't accounted for or assumed anything in our guidance around Intuit Assist for the coming year. So I just wanted to start there. Now let me get to your question. We actually have an incredible amount of momentum with Intuit Assist, and you're going to see it at Investor Day. But let me start with the foundation of what I shared in the prepared remarks, which was We have about a million businesses that are engaging with Intuit Assist. And it is going to play a significant role in the future because that is actually the foundation of what we bet the company on six years ago, which was really around data and AI. But really the bet was about delivering experiences where we do the work for our customers. And so, you know, a number of areas that our customers are using today as part of the million that I mentioned is, along the lines of marketing campaigns with proposed revenue that our customers could garner that we could then execute on the behalf of our customers. Things like taking, by the way, pictures of an estimate that you may have written on the go that you can take a picture of and we will create a digitized estimate invoice, your payment schedule that you want, all within the platform, send it to your customer, remind you in the business feed of, in essence, invoices that are overdue, capital that we can give you access to. What I just mentioned are elements of what some of our customers are using today. We're really right now focused on money in, money out, because those are the most critical areas for our customers. And if I just take a step forward, ultimately our entire goal, because of our advantage, which is data and AI, our goal is that we do all of the work for our customers. These examples I just illustrated is all on that path. Now, what it means for us as a company, beyond the, of course, the benefit of helping drive revenue growth and profitability growth for businesses, what it means for us is we believe it will have an impact in a couple of areas. One, new customer growth, particularly the smaller customers. But then two, adoption of our services. Because the examples I just mentioned, take a picture of a scribble note, upload a PDF file, we'll create estimates, invoicing, progress payments. That all turns into revenue for us. And that, by the way, doesn't even touch on the fact that embedded in our platform going forward is going to be AI-powered live expertise, which is a monetizable vet, ultimately with the goal of we do everything for you and with you. And so it will be an enormous sort of part of our experience. and growth in the future. And we're making really good progress, all of which, by the way, we'll also show all of you at Investor Day. And I'll end with where I started. None of this is contemplated in our guidance, but it's a big part of our future, and we're excited about it.
Alex Zukin
Analyst at Wolf Research
Super. Thank you so much.
Sasan Ghadarzi
CEO
Thank you.
Beau
Conference Operator
Thank you. We go next now to Kardec Mehta at North Coast Research.
Cash Rangan
Analyst at Goldman Sachs
Good evening, Sosan. Just a question on tax. Sosan, it seems as though you're executing on the live products. You're starting to execute on the full service. I'm just wondering, what was the thought of maybe lowering guidance now considering the momentum you're building in the business?
Sasan Ghadarzi
CEO
yeah thank you for the question you know first of all i would start with um it's actually one platform and that's the power of of our scale uh customers um ultimately can do it themselves they can do it with assistance or or we'll do it for customers and it's all uh one turbo tax platform and our experts our virtual experts all sit on the same platform except they're on the other side of the platform which is leveraging the customer's data and AI capabilities to do their taxes for them or with them. I just wanted to start with that foundational point that it's not a lot of different products. It's actually one platform, which is what gives us the scale that we're looking for. When we make decisions around long-term expectations, we don't make them lightly. In fact, I think it was five and a half years ago, right when I became CEO, we had updated the long-term expectations of tax. And so we take these decisions very seriously. And so it's something we've been thinking about for some time. And really, it comes down to a very simple math equation. When you look at our TAM, which is $35 billion, $5 billion do-it-yourself and $30 billion assisted, both consumer and business, That's where the largest growth opportunity is. That's where we're really growing high double digits, 17%, with customers growing 11%. And it's 30% of the franchise today. And we are also being very aggressive with DIY, both complex higher-income customers, but based on some green shoots that we saw this year, we're also going to be very assertive with lower-income folks that are in the do-it-yourself category. And in that context, we just felt like the time was right to not only guide prudently for the coming year, but also adjust the long-term expectations. And I want to reiterate what you heard from Sandeep. It's an interim adjust. And once we get to sustained growth double digit, we'll then rethink the long-term guidance. But until then, that's what informed the decision that we made.
Cash Rangan
Analyst at Goldman Sachs
And just one follow-up, as you look at the health of your small business, any change as you look throughout the quarter, any changes that may be giving concern or hope for what's happening to your customers?
Sasan Ghadarzi
CEO
You know, the headline I would give you, Karthik, is stable. Across our small businesses, we generally, this differs, by the way, by sector, by state, by country, but at an Uber level, we see revenue and profitability up in this fiscal year for businesses that we serve. We see cash reserves still down 6% to 7% compared to last year, but it's way up compared to pre-pandemic levels. We also see hours worked higher. So headline is it's stable. And by the way, we see the same thing on the consumer side, which is it's stable.
Cash Rangan
Analyst at Goldman Sachs
Perfect. Thank you very much. Appreciate it.
Beau
Conference Operator
Yeah, very welcome. We'll go next now to Daniel Jester with BMO Capital Markets. Great. Thanks for taking my question. It was great to hear about QBO Live, the number of clients more than tripling. Can you maybe spend a moment talking about what's resonating there? And as you sort of move more into the middle market, what's the opportunity for QBO Live to accelerate that more upmarket push? Thanks.
Sasan Ghadarzi
CEO
Yeah, thank you for the question. Let me start with your question of what's resonated with the smaller businesses. For us, we've actually had product market fit, meaning that our experts on our platform can really help our businesses with bookkeeping, accounting, providing advice. Really, the biggest challenge that we've been working through in the last year is how to think about the benefit, how to think about the offering, how do we actually go to market? The great news is, every business at some point in their life throughout a year, they're engaging a bookkeeper and an accountant. We're not trying to create an opportunity. The opportunity is there. It's manual, it's disaggregated, it's high-priced. And so really the biggest thing has been our focus on how do you really help a customer understand that this is now a part of our platform and that we can help them with all the key problems that they have. And I would say that that's an area where we've really uncovered how to do that and we're accelerating. And I don't want to... make you feel like we've reached the destination. I think we still have a lot of work to do in this area, but we've really, I would say, cracked a nut that we're excited about, particularly around our decision to embed AI-powered experts into our offering as we look ahead. And lastly, this is a far bigger opportunity with larger customers because they expect it. They expect a CFO for a hire, an HR for a hire. They expect an assistant to be able to help them with their books, with their accounting, with their employee inventory decisions. And so part of... What you'll hear us talk about at Investor Bay is as we're accelerating our focus with mid-market with a business suite that has all the key capabilities that a business needs, a big element of it is the expertise that it comes with. I think the differentiator for us is these are AI-powered experts that sit on the platform and can really provide a range of services for customers, but we believe it's a bigger opportunity as we move up market. And last thing, by the way, I'll end with, these are small sample sizes still, but those that have live experts, the attach and use of services like payments and payroll are actually higher, which really is a great benefit for customers and for us. Great. Thank you very much. Very welcome.
Beau
Conference Operator
We'll go next now to Arvind Ramani at Piper Sandler.
Kardec Mehta
Analyst at North Coast Research
Hi, thanks for taking my question. Just a couple of questions. In some of the prior calls, you've provided some additional color on some of the benefits you're seeing with AI and given the Sorry, you're cutting in and out.
Sasan Ghadarzi
CEO
We can't now. Go ahead, continue.
Kardec Mehta
Analyst at North Coast Research
Yeah, I'm just trying to get some color on some of the impact of AI that you've seen both from a revenue ad but also from a cost perspective across your businesses. Is there any additional information you're able to kind of provide in terms of quantification of those benefits you're starting to see?
Sasan Ghadarzi
CEO
Yeah, thank you for your question. I think a couple of things I would say. First of all, we're seeing – the impact of our usage and innovation across all of our platforms. Across Credit Karma, it's really driving a lot of the automation and do it for customers within TurboTax, even with TurboTax Full Service, where we're doing a lot of the work for experts so that way they can serve more customers. And of course, across our business platform that I articulated the examples earlier. So I want to first be clear, this is broad-based across our entire platform. And We are really focused on how AI reimagines our internal work within Intuit as well. I would say, really, the revenue is immaterial this year, and we didn't account for anything in the coming year, but we believe it will be a large driver of growth in the future years, and the growth will be really usage of services, better conversion, better retention, and these are the green shoots that we're seeing. with, for instance, our million businesses that are using it today. And in terms of our cost structure, remember, data and AI have been core to our investment thesis and our bets over the last five, six years. And what we do is not capital intensive. At the same time, we're very intentional about the investments that we've had to make. And any investments we need to make to win in this world of AI has been contemplated in the guidance that you heard from Sandeep.
Sandeep Arjula
CFO
i don't know if you add anything i think that that covers it one thing to keep in mind as it compares to you know possibly other uh companies in your portfolio uh one to one point ai has really been in our one race i wouldn't expect any uh you know meaningful change in our cost structure secondly we use uh AWS for a lot of the processing. So it's not like we're building up our own data center. So that's also very asset-like for us. And the other factor, as Sasan alluded to, we are quite frankly also seeing improvements in our own productivity. We're seeing improvements in our developer productivity. We're seeing improvements in our overall G&A productivity. So just factors to keep in mind that AI should not be a, not get in the way of our commitment to continue to find operating leverage and continue to scale our margin over time.
Kardec Mehta
Analyst at North Coast Research
Perfect. And just one quick follow up, you know, just on TurboTax Live, you know, as you're thinking of kind of directing questions or your customers to, you know, having, you know, kind of your AI sort of answer it versus QuickBooks Live, or sort of the, you know, kind of accounting or CPA, obviously, the AI is going to be like a lower R pool versus like directing someone who, who is basically like, more like service oriented. How do you balance that? Because one does come at higher ARPU, but lower margin. And of course, AI is lower revenue, but lower ARPU, but higher margins. How do you balance that out?
Sasan Ghadarzi
CEO
Yeah, I think the premise of what you're articulating is not what we're seeing. We actually believe that based on all of our investments with data and AI, it's actually higher ARPU because it drives better attach of our services. It actually drives... more attached of our human power expertise. And by the way, when our human powered experts or AI powered human experts get involved, they're actually quite effective and productive because they're sitting on our data and AI platforms. So we're actually seeing two things. higher ARPU over time because of what I articulated, but also more effective and efficiency on our platform because we are as aggressive as we are in applying AI externally, we're as aggressive internally based on what you just heard Sandeep talk about. So it's actually the reverse of the premise that you talked about in terms of what we see. And I don't know, Sandeep, if you would add anything.
Sandeep Arjula
CFO
The thing to keep in mind is AI is actually, the name of the game is Solve for Confidence and Eliminating Fear, Uncertainty, and Doubt. And by using AI, by using our AI powered experts, we're actually doing that at scale. And the important thing to keep in mind is it's actually helping us open up the aperture of the customers we can serve and really go after penetrating a TAM. That's driving a lot of the success that you've seen in the assisted category. Some of those are fully, you know, outsourced to us. Some of those are do it with me. So just something to keep in mind as you look at the strategic opportunity that this opens up for us as well. That's incredibly helpful. Thank you very much.
Beau
Conference Operator
Thank you. Thank you. We go next now to Brad Sills with Bank of America. Oh, great. Wonderful. I wanted to ask a question around the platform for AI, the Gen OS and the studio that you've outlined in the past. I know it's a little further out to start thinking about separate SKUs, and it sounds like this is more of a conversion and a retention play in the near term. But what were some of the learnings that you had over the course of the year in building out that platform for AI, harnessing the data, and some of the platform components that you've outlined at the Analyst Day last year that are underpinning that? Thank you so much.
Sasan Ghadarzi
CEO
Sure. First of all, let me start with your question around the SKUs. This is a progression, and this is a really important element to call out. What you've heard us talk about is that we believe, and we're seeing this in our proof points, and the green shoots that we're seeing is that, one, this will drive new customer growth because it will just make it far easier and simpler for a new customer to use our digital platform that comes with AI-powered experts. Two, we believe that it's an opportunity for the adoption of our services, which also includes live services like payments, payroll, MailChimp, and our live platform, which is our AI-powered human experts. And those are significant customer and growth drivers for us. The progression is as we are focused on the innovation that we articulated earlier, things such as literally a customer being able to take a picture of a scribble note, upload a PDF document for us to be able to put together an estimate all the way to getting them paid, following up with their customers, putting marketing campaigns together for them. The progression is we'll get to a place where we'll actually test standalone SKUs where the AI agent is doing everything for the customer. And that could be a standalone SKU that we could test sometime in the future. But you have to progress your way to that. And that's really what the element of progression talks to. The last thing, which I think was the other element of your question, You know, what we're doing is really hard, which we love because it's hard to replicate. And what's hard about it is, first, you have to have the data. And we have a lot of data. It's our customers' data. But when you look at, for every business, we have 500,000 data points. That means we are uniquely positioned to be able to help them with managing their cash flow because it's about their cash flow. It's not about something generic because we see all of their money coming in, money going out. the creditworthiness of their vendors, the employees that they have. And so the investments that we've made in the data has been more than ever crucial, because then it allows us to leverage our GenOS platform, which is our GenAI capabilities, and train the Intuit LLMs on the customer's data to be able to then deliver the experiences that I was just articulating And our LLMs have agency and authority to be able to use other LLMs that could enhance the experience. So the biggest thing that we've learned to sort of punchline answer your question is the combination of the data investments, the investments we've made in knowledge engineering, machine learning, and our LLMs that really delivers accuracy, performance, cost effectively is extremely hard to copy because we live in a world of financial management, and that's really our biggest advantage going forward and really our biggest growth opportunity as we look ahead.
Beau
Conference Operator
That's exciting. Thanks, Hasan. Thank you. Thank you. And ladies and gentlemen, that is all the time we have for questions this afternoon. At this time, Mr. Godarzi, I'd like to turn things back to you for any closing comments, sir.
Sasan Ghadarzi
CEO
Well, listen, everybody, thank you for your time. Thank you for all of your questions, and we hope to see all of you at Investor Day. Be safe. We'll see you soon. Bye-bye.
Beau
Conference Operator
Thank you. Ladies and gentlemen, that does conclude into its fourth quarter and fiscal year 2024 conference call. Again, thanks so much for joining us, everyone. We wish you all a great evening. Goodbye.
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