Intuit plans personal finance ambitions with Credit Karma buy

Intuit, the accounting and tax software company behind QuickBooks, TurboTax and Mint, agreed to buy CreditKarma for $7.1 billion in cash and stock, in a highly anticipated announcement. 

The deal brings together two of the nation's leading personal finance companies for consumers and in certain cases freelancers and small businesses, as millions of people use their products to manage their personal finances or emerging businesses, manage their credit profiles or complete their taxes. 

The deal is expected to be neutral to accretive during the first full fiscal year after the transaction closes. 

Intuit CEO Sasan Goodarzi said the combination fits directly with Intuit's mission and long term strategy, which is to power prosperity around the world. He said the company's bold goal for 2025 is to double the household savings rate for customers on the Intuit platform.

"This acquisition is a giant step forward in achieving that goal and significantly accelerates execution of our big bet to unlock smart money decisions," Goodarzi, said on a conference call Monday afternoon. "This big bet is aimed at helping consumers address the personal finance problem they face today — helping them reduce debt, maximize savings and put more money in their pockets."

He mentioned household debt in the U.S. reaching $14.1 trillion and said 23 million consumers relied on at least one payday loan in 2018 to get faster access to cash. He said consumers could unlock billions in potential savings if they had better understanding of their personal finance. 

He said the platform will provide consumers with transparent access to their personal financial information to help them improve their financial health. He said the combination would help connect consumers to pre-approved offers on personal loans, home loans, credit cards and insurance. 

The companies will also connect consumers to higher yield savings and faster access to their paychecks and also help them improve their credit scores. He said the combined companies will be able to match financial institutions to the right customers with the right offers to meet their needs. 

Credit Karma provides about 4 billion credit scores, and has grown to a platform with more than 100 million members, with 37 million of them active on the platform every month and 88% of active members engaging the platform on mobile devices. More than half of its members are under age 44.

Credit Karma had more than $1 billion in unaudited revenue in 2019, a 20% increase from the year earlier. 

"When we started the business we saw consumers lost in a sea of complexity and the opportunity for technology to make a difference," Credit Karma CEO Kenneth Lin said. "Today we are leaders and our business model is quite simple. We help consumers find the right product for them based on their credit, their financial profile with their consent."

Leslie Parrish, an Aite Group analyst that follows consumer lending, told Mobile Payments Today that the ability to access data from is critical for lenders to make targeted offers to them. 

"Data from a loyal following of consumers is critical for lenders who want to offer the right product at the right time for the best price," Parrish said via email. "Credit Karma has facilitated this while offering a broad range of services from credit scores to tax preparation."

Parrish said the deal will allow Intuit to gain access to Credit Karma's rich depository of data while enabling it to provide a menu of services that consumers need to manage their personal finances. 

The $7.1 billion price tag will include $1 billion in equity awards that will be expensed over three years. Upon closing, Intuit will issue about $300 million in restricted stock Credit Karma employees, which will be expensed over four years. 

The deal is expected to close by the second half of 2020. 

Cover image: AP