Intuit (INTU -0.34%)
Q1 2024 Earnings Call
Nov 28, 2023, 4:30 p.m. ET
Contents:
- Prepared Remarks
- Questions and Answers
- Call Participants
Prepared Remarks:
Operator
Good afternoon. My name is Chelsea, and I will be your conference operator. At this time, I would like to welcome everyone to Intuit's first quarter fiscal year 2024 conference call. All lines have been placed on mute to prevent any background noise.
After the speakers' remarks, there will be a question-and-answer period. [Operator instructions] With that, I'll turn the call over to Kim Watkins, Intuit's vice president of investor relations. Ms. Watkins.
Kim Watkins -- Vice President, Investor Relations
Thanks, Chelsea. Good afternoon and welcome to Intuit's first quarter fiscal 2024 conference call. I'm here with Intuit CEO, Sasan Goodarzi; and our CEO -- CFO, Sandeep Aujla. 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 statement.
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 Goodarzi -- Chief Executive Officer
Thanks, Kim, and thanks to all of you for joining us today. We had a very strong first quarter and have great momentum innovating on our platform across the company. Total revenue grew 15%, driven by small business and self-employed group revenue growth of 18% and consumer group revenue growth of 25%. This was partially offset by Credit Karma revenue decline of 5%, in line with our expectations for Q1 given the macroeconomic environment.
With the strong start to the year, we are reiterating our full year guidance for fiscal year 2024. Consumer group revenue growth reflects a strong finish to the tax extension season. We remain focused on transforming the assisted consumer and business tax categories with TurboTax Live. Our innovation in tax has accelerated in several areas.
First, the Credit Karma platform is leveraging data and AI to deliver personalized experiences and compelling tax offers. Second is the innovation with TurboTax Live to deliver speed and confidence to prior-year assisted customers, particularly with full service, where we can get taxes done in as little as an hour using data, AI, and our expert platform at scale. And third, Intuit Assist, our gen AI-powered financial assistant, helping customers in key areas where confidence matters most. For example, understanding their refund or getting answers to their questions as if they're talking to an expert.
We ran many experiments during the extension season, and the learnings gave us confidence in our game plan to win this tax season. We believe this is Intuit's most exciting era yet. Five years ago, we declared our strategy to be an AI-driven expert platform, with data and AI core to fueling innovation across our platform. We're delivering experiences where the hard work is done for you with a gateway to human expertise, powering our customers' prosperity and accelerating penetration of our $300 billion in TAM.
The launch of Intuit Assist is the result of years of investment in data and AI. At the core of our platform is powerful relevant data. Intuit has incredibly rich longitudinal, transactional, and behavioral data for our 100 million customers. We have 500,000 customer and financial attributes per small business and 60,000 financial and tax attributes per consumer on our platform.
And with our GenAI Operating System, GenOS, we empower Intuit technologists to create breakthrough AI experiences across the platform. This includes utilizing our own powerful financial LLMs, as well as those from other leaders in gen AI, which together unlock new opportunities to serve our customers with accuracy and speed in a cost-efficient way. We are creating a future of done for you, a future where the hard work is done automagically on behalf of our customers with a gateway to human expertise, fueling their financial success. Intuit Assist, powered by gen AI, is critical to delivering unparalleled benefits for our customers over the next decade.
Let me share a few updates on Intuit Assist across our offerings. First, Mailchimp. We're rolling out two new gen AI experiences designed to help our customers grow their revenue and save time. These include AI-driven audience segmentation and marketing automations.
I'll share more on those in just a moment. Second, TurboTax. As I shared earlier, during the extension season, we tested new gen AI experiences to deliver higher confidence for our DIY customers. This includes in-topic accuracy check and personalized explanations throughout the filing process that help explain a customer's tax outcome.
We're excited about rolling out these experiences this season. Third, QuickBooks. We are testing gen AI to help customers save time and run their business with complete confidence, including a digital expert that can surface business insights and allow customers to dig deeper or connect them to a human expert. For example, we're serving up proactive business insights to customers with an actionable business summary.
These customers are using the business summary as a launching point to learn, create reports directly using Intuit Assist, and take actions to drive their business success. These experiences will be rolled out in the coming months. And in the future, we plan to automate these actions and do the work for our customers. Fourth, Credit Karma.
We're testing gen AI to help our customers find the products that are right for them in a highly personalized way. For example, based on our research, prime members spend an average of five hours online comparing credit card benefits. With our members' credit data and spending history from accounts they choose to link to Credit Karma, we can use gen AI to help members select the right credit card for them, optimized based on their personal spending history. This is designed to increase engagement with our members and help them improve their financial health and drive financial success.
These experiences will be rolled out in the coming months. We are excited by Intuit Assist's early progress. It will change our relationship with customers as we move from a transactional workflow platform to a trusted assistant that our customers rely on daily to power their prosperity. We believe Intuit Assist will lead to higher frequency of engagement and monetization across the platform.
Let me now highlight progress across two of our five Big Bets. As a reminder, our five Big Bets are revolutionize speed to benefit, connect people to experts, unlock smart money decisions, be the center of small business growth, and disrupt the small business midmarket. Our fourth Big Bet is to become the center of small business growth by helping our customers get new customers, get paid fast, manage capital, and pay employees with confidence in an omnichannel world. In payments, our innovation continues to drive digitization, from creating an estimate to invoicing a customer to getting paid to paying a supplier.
Today, easier discovery, auto-enabled payments, instant deposit, and Get Paid Upfront are all helping drive adoption of our payments offering. Total online payment volume growth was strong in the quarter at 21%. We're also making good progress digitizing B2B payments to accelerate and automate transactions between small businesses and ultimately improving their cash flow. We made our bill pay offering widely available to customers during the quarter.
While it's early, we are seeing midmarket customers choosing the paid subscription offering at approximately 2x the rate of non-midmarket customers, indicating this paid offering is resonating with larger customers. Turning to Mailchimp. We are well on our way to becoming the source of truth for our customers to help them grow and run their business. As I shared earlier, we're rolling out several features powered by Intuit Assist, in time for peak holiday season for many of our customers.
Let me highlight two of these impactful benefits designed to help our customers grow their revenue while saving time. First, AI-driven audience segmentation, which allows small businesses to target specific audiences. Many customers don't use audience segmentation today despite the fact that it can drive up to 60% lift in average order revenue -- or average order value over 12 months. With Intuit Assist, a customer can use conversational language to more quickly build segments and use them as a part of a marketing campaign.
Second, AI-powered marketing automation, which are automated workflows that helps small businesses reach their customers in uniquely tailored ways. Today, many of our customers don't use marketing automation because they are time-consuming to set up even though they can help them drive higher revenue. With Intuit Assist, Mailchimp creates marketing automations which can easily be turned on, and email content can be generated and edited. Our fifth Big Bet is to disrupt the small business midmarket, representing a TAM of 1.7 million customers, 800,000 of which are already in our franchise but are using a core QBO or desktop product.
Online midmarket customer and revenue growth remains strong, and we are driving increased adoption of QuickBooks Advanced, payments, and payroll, resulting in ARPC expansion as we serve these midmarket customers with our full ecosystem of services. We are proud of our innovation and the impact that we're making on our customers' lives. We also continue to make an impact on the communities that we serve. This quarter, we launched Intuit for Education, a new financial literacy program to provide Gen Z and Gen Alpha students access to Intuit products and teach them personal and small business finance skills.
We also announced the first set of winners of our Coalfield Solar Fund, providing grants to incentivize solar energy projects in coal mining communities to help build a sustainable future. Wrapping up, with our durable AI-driven expert platform strategy and focus on innovating with gen AI across our platform, we are more excited than ever about the opportunity in front of us and our ability to power prosperity for our customers. We are also delighted to be one of the only eight Fortune 500 companies named to Fortune's inaugural top 50 AI innovators list. With that, let me now hand it over to Sandeep.
Sandeep Aujla -- Chief Financial Officer
Thank you, Sasan. For the first quarter of fiscal 2024, we delivered very strong results that exceeded the high end of our guidance range across all key metrics, including revenue of 3 billion, up 15%; GAAP operating income of 307 million, versus 76 million last year; non-GAAP operating income of 960 million, versus 662 million last year, up 45%; GAAP diluted earnings per share of $0.85, versus $0.14 a year ago; and non-GAAP diluted earnings per share of $2.47, versus $1.66 last year, up 49%. I am pleased with our early momentum this fiscal year. Turning to the business segments.
Small business and self-employed group revenue grew 18% during the quarter, driven by online ecosystem, which grew 20%. Our results demonstrate the power of our small business platform and the mission-critical nature of our offerings, which continue to resonate with customers as they look to grow their businesses and improve cash flow in any economic environment. 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 19% in Q1, driven mainly by customer growth, higher effective prices, and mix shift. Second, we continue to focus on connecting the ecosystem. Online services revenue grew 20% in Q1, driven primarily by payroll, Mailchimp, payments, capital, and time tracking. Within payroll, revenue growth in the quarter reflects an increase in customers adopting our payroll solutions and a mix shift toward higher-end offerings.
In Mailchimp, revenue growth was driven by higher effective prices and paying customer growth. And within payments, revenue growth in the quarter reflects ongoing customer growth as more customers adopt our payments offerings to manage their cash flow, as well as an increase in total payment volume per customer. Third, we continue to make progress expanding globally by executing our refreshed international strategy, which includes leading with both QuickBooks Online and Mailchimp in established markets and leading with Mailchimp in all other markets as we continue to execute on a localized product and lineup approach. On a constant currency basis, total international online ecosystem revenue grew 16%.
Desktop ecosystem revenue grew 14% in the first quarter and QuickBooks Desktop Enterprise revenue grew in the high single digits. We are more than two-thirds of the way through a three-year transition for customers that remain on our license-based desktop offering to a recurring subscription model. In conjunction with our business model transition, we also raised prices across multiple desktop products this October, consistent with our principle to price for value. Looking ahead, we expect continued strong desktop ecosystem revenue growth this year as we complete the remaining part of the three-year transition.
Our focus is to continue innovating across our online ecosystem and to help our desktop customers migrate seamlessly to our online offerings. We continue to expect the online ecosystem to be a growth catalyst longer term. Moving to Credit Karma. Credit Karma delivered revenue of 405 million in Q1, down 5% year over year.
We saw partners taking a conservative approach to extending credit in both personal loans and credit cards during Q1. This performance was consistent with our expectations and our prudent approach to guidance given the uncertain macroeconomic environment. On a product basis, the decline in Q1 was driven primarily by macroeconomic trends across personal loans, auto insurance, home loans, and auto loans, partially offset by growth in credit cards and Credit Karma Money. Shifting to the consumer and ProTax groups.
Consumer group revenue was 187 million and grew 25% in the quarter, and ProTax revenue was 42 million and grew 24%. During the quarter, we saw stronger-than-expected TurboTax return volume from states, both with and without extended tax deadlines, and strong performance in share of total returns during extension season. As Sasan shared earlier, we are excited about the innovation across TurboTax. The multiple experiments we ran during the extension season bolster our confidence in our game plan to win this coming tax season.
Now, let me briefly touch on our financial principles and capital allocation. Our financial principles guide our decisions, they remain our long-term commitment, and are unchanged. We finished the quarter with approximately 2.3 billion in cash and investments and 5.9 billion in debt on our balance sheet. In September, we raised $4 billion in secured -- sorry, in senior notes to repay the outstanding balance on our unsecured term loan.
These notes carry a weighted average coupon of 5.29%, approximately one point lower than the term loan rate at the end of Q4. As a reminder, during Q1, we made tax payments of approximately 710 million that were deferred from fiscal 2023 due to the IRS disaster area tax relief. We also repurchased $603 million of stock during the first quarter. Depending on market conditions and other factors, our aim is to be in the market each quarter.
And lastly, the board approved a quarterly dividend of $0.90 per share, payable on January 18, 2024. This represents a 15% increase versus last year. As I stated earlier, I'm pleased with the early momentum we are seeing in fiscal 2024, highlighting the strength of our platform within the uncertain macroeconomic environment that is consistent with our expectations. We have a proven playbook and a track record of managing for the short and the long term, including controlling discretionary spend to deliver strong results, while investing in what is most important for future growth.
Our goal remains for Intuit to emerge from this period of macroeconomic uncertainty in an even greater position of strength. Moving on to guidance. We are reaffirming our fiscal 2024 guidance. This includes total company revenue growth of 11% to 12%, GAAP operating income growth of 15% to 18%, non-GAAP operating income growth of 12% to 14%, GAAP earnings-per-share growth of of 11% to 15%, and non-GAAP earnings-per-share growth of 12% to 14%.
Our guidance for the second quarter of fiscal 2024 includes revenue growth of 11% to 12%, GAAP earnings per share of $0.62 to $0.68, and non-GAAP earnings per share of $2.25 to $2.31. As a reminder, we are taking a prudent approach with guidance given the continued macroeconomic uncertainty. You can find our full fiscal 2024 and Q2 guidance details in our press release and on our fact sheet. With that, I'll turn it back over to Sasan.
Sasan Goodarzi -- Chief Executive Officer
All right. Well, thank you, Sandeep. And to wrap it up, we are confident in our AI-driven expert platform strategy and progress across our five Big Bets and creating a future of done for you with a gateway to human expertise. We believe this will change our relationship with customers, becoming their trusted advisor, leading to higher engagement and monetization.
The combination of our assets and our strategy creates a growth flywheel for Intuit to accelerate penetrating our $300 billion in TAM. With all of that said, let's now open it up to your questions.
Questions & Answers:
Operator
Thank you. [Operator instructions] Our first question will come from Raimo Lenschow with Barclays. Your line is open.
Raimo Lenschow -- Barclays -- Analyst
Perfect. Thank you. Sasan, on the AI strategy, like, obviously, you know, you have like one -- you know, it seems like one big platform that is driving it. Like can you -- what's the kind of opportunity to kind of learn from one segment and use it in the other segment? And as part of that, also, like are you impacted by the chip shortage? Will that kind of impact roll out for you? Thank you.
Sasan Goodarzi -- Chief Executive Officer
Yeah. Thank you for your question, and I actually think it's a really interesting question that you're asking in terms of how are we learning across platforms. The short answer is we capture best practices and share the insights on a daily basis across our teams. And in fact, I'll just use our staff as an example.
We get weekly Slacks with documents that share the best practices, the progress that has been made, and how that informs the next week across each of the platforms. And we spend 80% of my staff meeting actually doing product reviews of Intuit Assist. A big -- large part of it is what the key best practices are, learnings are. And I would tell you that there's a lot of commonality in themes across our learnings across the platform, which actually is simply putting us in a position to accelerate our pivots and our progress in innovation and the timing of going VA across the platform.
To your second question, no, we're not impacted by the chip shortage. It does not at all impact our launch plans.
Raimo Lenschow -- Barclays -- Analyst
OK. Perfect. Congrats. Thank you.
Sasan Goodarzi -- Chief Executive Officer
Thank you.
Operator
Our next question will come from Keith Weiss with Morgan Stanley.
Keith Weiss -- Morgan Stanley -- Analyst
Excellent. Thank you for taking the question, guys, and congratulations on a really solid quarter. Two questions, one for Sasan and one for Sandeep, and really digging into what I think were some of the bigger surprises in the quarter. Sasan, in this environment, I think we're surprised to see strength in a marketing platform like Mailchimp.
And you called that out as part of the strength in online services. Do you think that's more of a Intuit sort of independent factor of repackaging, marketing more aggressively, distribution, or is it the market is better than we expect? And then for Sandeep, operating margins were really strong in the quarter. Any one-time items or pull-forward expenses or push-out expenses that we should be mindful of in terms of why that type of operating margin and performance isn't going to be reflected in the rest of the year? Thank you.
Sasan Goodarzi -- Chief Executive Officer
Thanks for the question, Keith. I'll take your first one. What you're seeing from us in Mailchimp is entirely execution. We're not getting tailwinds from the macro environment.
And as I mentioned, when we closed the acquisition a while back, that our biggest opportunity was to be clear about our product improvements, our lineup, and to be able to create one growth platform, develop strength internationally, and go to midmarket. And by the way, we've made a lot of progress in all of those areas. We still have a lot of work ahead of us to be clear. But everything that you're seeing is based on our execution and no macro tailwinds.
Sandeep Aujla -- Chief Financial Officer
And on the margin question, I think -- on the margin question, let me start out by reiterating our commitment to having our expenses gross lower than revenue and, in essence, delivering our margin expansion and operating leverage, which is something that we hold dearly, and our guidance of 40 bips to 60 bips expansion for the year reflects the discipline that we have as a management team. On the margin for the quarter, I would share that I won't get too fixated on the quarterly number. We had some expenses that moved out of the quarter into later parts of the year, including some marketing expenses. And as I shared during the prepared remarks, we are committed to our full year guidance on our operating income.
So, that's what I would guide you and the teams toward.
Keith Weiss -- Morgan Stanley -- Analyst
Excellent. Really nice job, guys. Thank you.
Sasan Goodarzi -- Chief Executive Officer
Yeah. Thank you.
Operator
Our next question comes from Siti Panigrahi with Mizuho.
Siti Panigrahi -- Mizuho Securities -- Analyst
Thanks for taking my question. Sasan, I want to ask about the health of small business. Where do you see right now strength and weakness at this -- in this environment?
Sasan Goodarzi -- Chief Executive Officer
Yeah. Thanks for the question, Siti. You know -- as you know, we've been in this macro environment for some time now and, you know, the small businesses that we serve are resilient for a couple of reasons. One, they're on our platform.
And by digitizing what they do, which is how they grow customers and managing their cash flow, they're far more resilient. And as we've shared before, anybody that's on our platform is nearly 20 points higher in their success rate than those that are not on our platform. So, we are part of sort of the health that we're experiencing on our platform. With that as context, I would just share a couple of data points.
You know, one, the number of companies and the number of employees that our small businesses are hiring still remains strong. Two, our total online payments volume grew 21%, which means that our small businesses are continuing to be competitive in serving their consumers. I'll also remind us, by the way, I think a year ago or more, that growth was in the 30%-plus, and so we have seen an impact. But just our overall platform is very resilient.
And then the last thing I would say is that, you know, the cash reserves of our small businesses is 90% of where it was this time last year. However, it's 128% of where it was pre-pandemic. So, their cash flow is stronger than several years ago, but, you know, 10% down from last year. And then very specifically, as you know, we serve service-based businesses, which is about 70% of the market.
We're not concentrated in any one particular area. But you'll see play things like auto repairs and -- that are doing well, professional services that are doing well. But just like pure construction, those that do lending are not doing well. So, there are sort of ups and downs across the small businesses that we see.
But in aggregate, you know, the health comes from the numbers that I shared with you.
Siti Panigrahi -- Mizuho Securities -- Analyst
Thanks. Thanks for that colors, Sasan.
Sasan Goodarzi -- Chief Executive Officer
Yeah. Very welcome.
Operator
Our next question will come from Alex Zukin with Wolfe Research.
Allan Verkhovski -- Wolfe Research -- Analyst
Hi. This is Allan Verkhovski on for Alex Zukin. Thank you for taking the question. QuickBooks Online accounting growth decelerated another 3 percentage points this quarter.
With respect to your growth drivers, is there anything that got meaningfully worse in the quarter or something that is worth emphasizing to investors that would be helpful for thinking about what growth could look like for the rest of the year?
Sasan Goodarzi -- Chief Executive Officer
Yeah, that was really driven by a larger price increase last year versus this year. That was really the only driver. We liked what we saw in terms of our acquisitions, our retention. So, that's the -- really the variance.
Allan Verkhovski -- Wolfe Research -- Analyst
OK. And as just a quick follow-up, would you be able to step through the monthly linearity that you saw in Credit Karma through the quarter and in November? Thanks.
Sasan Goodarzi -- Chief Executive Officer
Sorry. Can you ask your question again?
Allan Verkhovski -- Wolfe Research -- Analyst
Just on the Credit Karma, thinking about the linearity of the business through the quarter and November, I was wondering if you could just kind of talk through on a monthly basis what you saw in the underlying trends for Credit Karma?
Sasan Goodarzi -- Chief Executive Officer
Yeah. Well, I'll answer your question in two ways. One, as you heard in our prepared remarks, you know, we saw and we anticipated further tightening by our partners. By the way, it happened exactly the same time last year.
And so, we expected that as a -- our partners prepare for the end of the fiscal year and next year, there would be some further tightening. And that's really what we saw and that was included in our expectations and in our guidance as we thought about the year. That's number one. Number two, there -- not everything is linear because it depends on the number of days like a month like November, you know, based on in the U.S.
based on Thanksgiving week, the number of days that people take off, that actually impacts, you know, certain behaviors. And so, there's no linearity, but the quarter just in total was in line with what we expected.
Allan Verkhovski -- Wolfe Research -- Analyst
Thank you.
Sasan Goodarzi -- Chief Executive Officer
Yeah. Very welcome.
Operator
Our next question will come from Alex Markgraff with KeyBanc Capital Markets.
Alex Markgraff -- KeyBanc Capital Markets -- Analyst
Hey. Thanks for taking my question. Yeah, maybe just be curious to understand, Sasan, as you've done some of the testing around Intuit Assist across product categories, has there been any sort of price testing involved in that as well and how well received has that been if so?
Sasan Goodarzi -- Chief Executive Officer
Yeah. Sure. Let me answer your question in two ways because I think it's a great question and it's connected. First of all, the biggest insight and learning that we have had is it's really important to have, you know, embedded benefits where the customer is doing the work versus sort of something on the side where the assistant is there to help the customer.
So, what I mean by that is, you know, while a customer is looking to build a marketing campaign right within the flow, we, in essence, help them with the audience they should segment, the audience they should target, and then we will build their marketing campaign for them but with them in complete control. So, that's a really -- it may sound really obvious, but it's really important learning, which, by the way, translates to also what we learned in tax, which is within the flow of helping a customer understand their money outcome, helping them understand and doing accuracy checks for them. And if they've missed something, calling it out so they can address it right then and there. Those are examples that, by the way, is consistent across all of our platform workflows where embedded matters a lot.
The second is depth. Depending on the customer and what they're trying to do, there's a level of depth that they want to go to. So, an example is, you know, within QuickBooks, one of the things that we've been testing and it's been testing really well is a business summary. And the business summary, in essence, provides what we believe are the most important things that that customer should know.
And the customer then engages with those business insights and ultimately will create reports or ask more questions. What we've learned is we're not building propensity models in terms of the timing of when to connect them to an expert. That's a monetizable event for us because if not, you can go on and on, you know, having a Q&A and ultimately not get to the benefit as quickly as possible. So, those are major insights and learnings.
And those insights and learnings have led to how we're thinking about monetization. You know, in the case of Mailchimp, having gen AI SKUs based on the things that we can do for our customers automatically on their behalf. In the case of QuickBooks and, by the way, TurboTax, it's a monetizable event because it's a gateway to human expertise and expert help. And then we will be testing gen AI-specific SKUs also in QuickBooks.
So, those are illustrative examples of based on the benefits that we're learning about what's important to customers that then informs how we think about price testing. And so, far, we're pleased with what we're learning and how fast we're pivoting as a company.
Alex Markgraff -- KeyBanc Capital Markets -- Analyst
That's great. Thank you, Sasan.
Sasan Goodarzi -- Chief Executive Officer
Yeah. Very welcome.
Operator
Our next question will come from Steve Enders with Citi.
Steve Enders -- Citi -- Analyst
OK. Great. Thanks for taking the question here. I guess I want to ask on the tax business, what you saw this quarter from some of those newer product initiatives and maybe what kind of drove the strength there year over year and the share gains with some of those newer initiatives?
Sasan Goodarzi -- Chief Executive Officer
Yeah. Sure. Let me answer your question on two dimensions. One, there was a macro element which there were just more filers in the extension season than we anticipated, both, by the way, states that extend it and states that did not extend.
And these are more complex filers, and it's actually our sweet spot is why we were able to take share in this extension season. And so, that's one element of what drove our better-than-expected results. The three areas that we're excited about, these have been durable priorities where we did a lot of tests and experiments and got a lot of green shoots and learnings that will lead into this coming tax season: it's Credit Karma platform, it's TurboTax Live, and it's Intuit Assist. And I'll briefly touch on each of them.
Within the Credit Karma platform, we have more seamlessly built out the tax experience, whether you want to do it yourself or you want somebody to do it for you. And we've been -- we've developed very compelling SKUs within the Credit Karma platform, which, you know, having the opportunity to serve 42 million monthly active users that engage five times a month with not only a great product but a great set of SKUs, we saw green shoots and we're excited about that as we look ahead. The second is TurboTax Live. You know, we expanded the scale of our data, AI, and expert network.
What that means is and I'll just point out in two areas. One is the fact that for many customers that want to hand off all their taxes to us, we can get their taxes done within an hour. And that's a very big deal, to be able to engage an expert, have your data available, and get your taxes done in one setting. And then also being able to serve business tax customers, which we'll be launching at scale.
Those were areas of green shoots. And the last is Intuit Assist. Two big areas. One is accuracy checked, making sure that, in place, we help the customer, in essence, correct something that we believe is a mistake.
That's a big conversion driver, by the way. And then the second is just explaining refunds, explaining their money outcome, which is all done and driven by Intuit Assist, leveraging our knowledge, engineering capabilities, and our gen AI capability. So, those are the three things, along with the macro, where we saw green shoots that give us a lot of confidence as we head into season.
Steve Enders -- Citi -- Analyst
OK. Perfect. Thanks for taking the question.
Sasan Goodarzi -- Chief Executive Officer
Very welcome.
Operator
Our next question will come from Brent Thill with Jefferies.
John Byun -- Jefferies -- Analyst
Hi. Thank you. This is John Byun for Brent. First question, on Mailchimp, wondering if you could share some color on how it's doing in U.S.
versus international, and, you know, I don't know if you could tell us also about the cross-selling synergies with the rest of the small business platform. And second, any update on how the native bill pay is trending? Thank you.
Sasan Goodarzi -- Chief Executive Officer
Was your last question bill pay?
John Byun -- Jefferies -- Analyst
Yes, on bill pay.
Sasan Goodarzi -- Chief Executive Officer
Yeah. Got it. Thanks for the question. So, I'll start with Mailchimp.
You know, as we've talked about, one of our top priorities includes international. We've spent quite a bit of time and investment in translating to local languages; building out a team that can focus on EMEA; and third, making sure that we've got the right pricing, lineup, and go-to-market plan. And we're executing against that. We like what we see.
And it's contributing to the numbers that we reported. And I would say, for us, it's the balance of focus between U.S. and international. We see an enormous opportunity in U.S.
and international. So, we have the right balance focus as we think about the geographies. The second in terms of cross-selling, you know, as we shared at Investor Day, we are -- a big part of the thesis behind the acquisition was to create one growth platform. And what we shared at Investor Day was that we are building an AI-native CRM within the QuickBooks platform.
We're continuing to make progress in testing and learning and pivoting to get the product market fit. When we get the product market fit, that's really where the cross-sell takes place. We've not assumed or anticipated any contribution from that in our guidance this year, but it's a very important long-term strategic priority. It's the reason why we acquired the platform is to ultimately have one growth platform where you can grow your customers and manage your cash flow all in one place.
So, that's on the Mailchimp front. On bill pay, we're pleased with the fact that we're GA and we -- and as I think noted earlier, what we're seeing with our midmarket customers is midmarket versus non-midmarket customers, there's a 2x increase in those that are taking the subscription, the paid subscription. So, that just means that we're adding value. We also have work ahead of us in bill pay, things around batch payments, faster funding.
All the things that we know we have to have, it's on our road map and it will be launched in the future. So, along with the fact that we're GA, we're clear on what the gaps are and what -- and it's on our road map, we're working feverishly to really be able to digitize B2B for our customers because we believe it's a big opportunity for our customers to improve their cash flow and a big growth opportunity for us in the long term. So, that's the progress on both fronts.
John Byun -- Jefferies -- Analyst
Great. Thank you very much.
Sasan Goodarzi -- Chief Executive Officer
You're very welcome.
Operator
Our next question comes from Brad Reback with Stifel.
Brad Reback -- Stifel Financial Corp. -- Analyst
Great. Thanks very much. Sasan, as you think about the midmarket opportunity for the QuickBooks and the online ecosystem, given the value prop, is it easier to take share during difficult economic times because of that value prop or are customers just hesitant to move and wait for the economy to get better before they'll make a back office switch? Thanks.
Sasan Goodarzi -- Chief Executive Officer
Yeah. Great question. You know, I'll share two different perspectives in terms of what we're seeing. The first one is it really doesn't matter what the economic environment is.
If it's great, they don't behave differently. If it's challenging like it is now, they don't behave differently. We certainly don't see them -- any of our customers wanting not to switch because the economy is not good, which leads to the second point I wanted to make. So, the headline on the first question is it's not a tailwind or a headwind, whether it's good times or bad times.
However, what I would say is we see some green shoots. It's early. When we do bundling for our customers, when we go to our customers and share with them that they can digitize all of their payments, all of their payroll, and the benefits that it will have for our customers from a cash flow perspective, we see that having traction with our customers. And as we continue to build out our sales team, we're doing, I think, a far better job of account management.
And, you know, this is an area where if you look back five years ago, we didn't have the kind of value-added account management teams that we're building now where we're engaging our customers. They're hearing from us, right? We've been entirely a self-serve platform. And now that we're engaging our customers, a lot of them are starting to realize, wow, you have payments. I didn't realize you have payroll.
I didn't realize you have time tracking. I didn't realize you own Mailchimp. And that is an opportunity for us to drive an increased penetration in wallet share. So, I share that just to say that's where we're getting traction, that's where we're seeing progress, and that's where we see an opportunity as we look ahead.
Brad Reback -- Stifel Financial Corp. -- Analyst
Great. Thanks very much.
Sandeep Aujla -- Chief Financial Officer
Brad, what I would add is --
Brad Reback -- Stifel Financial Corp. -- Analyst
OK.
Sandeep Aujla -- Chief Financial Officer
And, Brad, what I would add is beyond just the QuickBooks side, we also are seeing strong progress on the Mailchimp side in terms of midmarket, where historically, before we acquired the company, was not at focus. And now, with some of the steps Sasan had mentioned, including account management, better onboarding, we are seeing better customer acquisition on the midmarket, as well as better retention year over year in the midmarket. So, that opportunity extends beyond just the QuickBooks for us and across entire platform, including Mailchimp.
Brad Reback -- Stifel Financial Corp. -- Analyst
Excellent. Thank you.
Sasan Goodarzi -- Chief Executive Officer
You're very welcome.
Operator
Our next question will come from Kirk Materne with Evercore ISI.
Kirk Materne -- Evercore ISI -- Analyst
Hi. Yeah. Thanks very much and congrats on the quarter. Sasan, I was wondering if you could just talk about the -- I realize you have a vast and sort of wide open TAM in your markets on the small business side.
But I was kind of curious if you're seeing any evidence that small businesses are looking to consolidate, you know, multiple technologies onto one platform. You all obviously offer a lot both on the front office there, as well as in the back office. Are you starting to see any of that sort of activity happening now that you're sort of integrating Mailchimp with QuickBooks? I realize it's early days and you don't need that to happen to be successful, but I was just wondering if you're seeing any evidence of that yet. Thanks.
Sasan Goodarzi -- Chief Executive Officer
Yeah. Kirk, the short answer is it's early, but we're seeing green shoots, and it's primarily because of what I shared just a moment ago. You know, as we're building out our account management team across Mailchimp and QuickBooks platform, as we're talking to our customers. And in fact, I personally spoke to three of them in the last month that are very large midmarket customers, two of them in LA and one of them in Miami.
And it actually starts with they didn't even know we have payments, payroll. They didn't even know we're the same company that owns Mailchimp as an example. Some of them use Mailchimp but don't use QuickBooks. Some of them use our payroll, but don't use our payments.
And so, the thing that we're inspired by and where we believe there's a big opportunity is the fact that we actually have a huge differentiation, which is around data, AI, a network of experts, and an ecosystem of applications. And the applications are all the things that a small business would want. And our account management team is really discovering for us the fact that our customers just don't know. And so, therefore, we engage them, build relationships, and talk about the benefits of all of our applications and then what could be done based on all of the capabilities that we have around AI and how that could fuel their success.
That's what's really opening up doors for us is just the unknown, and that's what we're excited about as we continue to accelerate building out our accounts management team. So, I think the long answer to your short question is, yes, customers would prefer to be on one platform and what we're learning is a lot of customers are not because they just actually don't even know what we do holistically, and that's the mission that we are on.
Kirk Materne -- Evercore ISI -- Analyst
Thank you so much.
Sasan Goodarzi -- Chief Executive Officer
Yeah. You're very welcome.
Operator
Our next question will come from Mark Murphy with J.P. Morgan.
Arti Vula -- JPMorgan Chase and Company -- Analyst
All right. This is Arti Vula on for Mark Murphy. Congrats on the quarter and thanks for taking the question. I just wanted to touch on QuickBooks Advanced.
You mentioned there at your Investor Day that the success of that product was more about the go-to-market versus kind of a new product or feature development. So, can you kind of discuss progress from your perspective on that front? And then in terms of the midmarket, is that -- can you talk about how that's faring in terms of overall health and maybe compare that to the lower end of the market? Thanks.
Sasan Goodarzi -- Chief Executive Officer
Yeah. Sure. Thank you for your question. You know, first of all, just to play back what I shared at Investor Day, I said if I had to pick one that was the most important lever going forward, it's go-to-market.
We are continuing feverishly to build out the product capabilities that we need on the platform because we don't plan to stop at 100 employees. Our plan is to serve midmarket customers over time that are far larger than 100. However, in the near term, sort of near mid-term, the biggest needle mover is go-to-market. And I would tell you that it continues to be bringing on the right skill sets of talent in sales and marketing.
And so, even in the last, I think, a couple of quarters it's been, we've hired a very strong marketing leader, where we've hired a very strong sales leader. We're hiring a couple of more sales leaders. We're bringing on account managers that have a lot of skill in selling and nurturing customers. Because when we think about midmarket, you know, it's really about a lot of the examples I was using earlier, which is really helping customers understand we -- they can run their business in one place on one platform, and the benefits of doing so and what it will mean to their cash flow and particularly helping them understand our road map as a company and what we are doing with Intuit Assist, which is really creating a future of done for you with always having a gateway to human expertise.
And that's enticing for midmarket customers. So, net-net, that's the way I would describe our focus area, but would want you to walk away to be we're continuing to invest in the product and in the platform because that's a big opportunity in the long term as well. You know, in terms of health, I think it really -- it comes down to the sector. You know, if you just use U.S.
as an example, it comes down to the state, you know, the sector that you're in. You know, generally speaking, based on our history, looking backwards, larger, more tenured customers can withstand more of economic turmoil versus someone that literally just started out their business and they only have $100,000 in their savings. And if that $100,000 is spent, then they're done, right? They go bankrupt. So, it really depends on the size of the business, how long that they've been in business, and then the segments of their business is in.
All those variables play in. I wouldn't say younger ones are more or less healthy and the older ones are healthier. I would just say it depends on the components that I just described a moment ago.
Arti Vula -- JPMorgan Chase and Company -- Analyst
Perfect. Thank you.
Sasan Goodarzi -- Chief Executive Officer
Yeah. Very welcome.
Operator
Our next question comes from Kartik Mehta with Northcoast Research.
Kartik Mehta -- Northcoast Research -- Analyst
Good afternoon. Sasan, maybe -- you know, we've talked a lot about the full-service business. And as you look at that business and all the learnings you've talked about, how will you define success for that business at the end of the tax season? Is it the number of returns you processed? Is it -- I guess what are the metrics that you will use to figure out if you had success or not?
Sasan Goodarzi -- Chief Executive Officer
Yeah. Thanks for your question. First of all, I'll start with something that's really, really important and that is, you know, the investments that we've made over the years where TurboTax is now one platform, and that platform is built on an incredible rich sort of data layer, AI layer, an expert network, and now, an ecosystem of apps, which is consumer app and business taxes. And the reason I started there is because now we have the ability in one place for you to do your taxes yourself, get help with an expert that's matched specifically to your needs, and we can do your taxes for you.
And in fact, you can request the same person to do your taxes for you year in and year out and provide advice along the way. The reason I started with that foundational element that we are one platform is as we go to market and start talking to customers about the notion of have choice with us and we can do everything for you, it actually creates a halo effect. And so, what we will look at are metrics around number of customers, conversion, retention, you know, ARPC across the entire franchise. And we also look at it by area.
So, very specifically, full service plays a very important halo effect because it's an element of confidence. It's actually knowing that if I want to hand everything off to someone, that Intuit can now do it for me, whether it's virtually or, now, locally, if I want to connect to an expert. But ultimately, the metric that will matter the most for full service is going to be ARPC because it's not just the numbers game, it's the value of these customers. We, of course, will measure a number of customers and ARPC, but ARPC will have the largest impact to our outcomes this year and in the future because, now, we do your taxes for you as a consumer and as a business.
Kartik Mehta -- Northcoast Research -- Analyst
Perfect. And just one quick question. You talked about not wanting to focus on one order for margins, but I'm wondering, as you look at the year, any differentiation or movement in marketing especially as the tax season unfolds?
Sandeep Aujla -- Chief Financial Officer
You know, Kartik, we are continuing to invest across our product, across the Big Bet, across gen AI, across marketing. And particularly as we go to a full service, we want to make sure that we are expanding our brand's equity beyond the DIY category to the full service. But I would not expect any meaningful shift in the seasonality of our marketing spend, which I think is the question that you're asking. So, you know -- and I feel pretty good about the campaigns and the investments that we're making across the go-to-market motions across tax, as well as the other segments.
Kartik Mehta -- Northcoast Research -- Analyst
Thank you. Yes, that was the question I was asking. I just did a poor job of it. So, thank you.
Sasan Goodarzi -- Chief Executive Officer
Thank you.
Operator
Our next question will come from Brad Sills with Bank of America.
Brad Sills -- Bank of America Merrill Lynch -- Analyst
Great. Thank you so much. Another question here on TurboTax as you're kind of heading into the next tax season here. You know, now that the focus is more on full service and TurboTax Live, is there something different about the end user, the end consumer filer that you're targeting now, you know, say going after that CPA segment that's different from traditionally where you've gone after that, you know, tax store? You've had tremendous success there against, you know, tax stores.
Now, that CPA segment. You know, is there some difference there and is there some learning from last year on go-to-market that you can apply this year to gain more traction there and then enter the market? Thanks again.
Sasan Goodarzi -- Chief Executive Officer
Yeah. Brad, thank you for your question, and it's actually spot on the way you asked it, and that is we view our opportunity as, you know, nearly 100 million customers that are either consumers, which is about 88 million of the 100 million, and the rest are business customers, small businesses. We view our opportunities going after them, which is a combination of small pros, mom-and-pop shops. Stores is actually a smaller part of the whole pie.
And in the last, I would say, 18 months, we've experimented a lot with how do we go after these customers, how do we raise awareness, how do we get them to consider? And ultimately, how do we ensure that when they come to our front door, our front door is a service front door, not a software front door because of the behaviors that they have. And a lot of those, both go-to-market and platform insights and learnings, is what has informed a number of things that I touched on earlier that we experimented with and ran tests in the tax extension season and what we feel good about going into this coming season. So, it was a long answer to your question, but yes, a lot of those insights have informed our game plan because we're not just the software platform, we're a software and service platform given who we're focused on serving. And by the way, while I have the floor, the same thing applies to small businesses as we think about what we're doing to embed QuickBooks Live in our offering.
Brad Sills -- Bank of America Merrill Lynch -- Analyst
Wonderful. Thank you, Sasan.
Sasan Goodarzi -- Chief Executive Officer
Yeah. Very welcome.
Operator
Our last question will come from Scott Schneeberger with Oppenheimer.
Scott Schneeberger -- Oppenheimer and Company -- Analyst
Thanks very much. I have a follow-up for Sandeep and then one for you, Sasan. Sandeep, on the margins in the quarter, you cited marketing, which I assume was predominantly that. Was there anything else in the quarter that was beneficial or was that the lion's share? And then you mentioned spread over the balance of the year.
In Kartik's answer, I felt you kind of were speaking to TurboTax, but it looks like you're expecting a bit of a down quarter on margin in the second quarter. So, will -- and it seemed like it was mostly in small business, the real benefit in the first quarter. So, will that end as of the second quarter? Is that truly something that is going to tail off in the second half as well? And then I'll come back for the follow-up. Thanks.
Sandeep Aujla -- Chief Financial Officer
Sure. Thanks for the question, Scott. The way I would think about Q1, we had multiple expenses that moved out of the quarter into later parts of the year, and marketing was one of those expense lines. And I would not say that marketing was the lion's share of it.
There were several things that we either expected will hit us in October that got pushed out. But I would definitely not take away as marketing being the lion's share of items that got pushed out. And you're right, some of those will get caught up, and we'll have those expenses in Q2. And so, once you look at the Q1 and Q2 spend together, those things will start normalizing out.
Again, I'll bring you and the team back to the fact that you should all be focusing on our margins on a full year basis. In any given year, we could have different expense trend lines. So, again, we remain confident in our guidance for the full year across the margins for the company.
Scott Schneeberger -- Oppenheimer and Company -- Analyst
Thanks. Appreciate that. And, Sasan, we're pretty well along now into Karma Guarantee. Would love just to get an update on that.
And Credit Karma was a bit stronger than we had anticipated in the quarter. Is it something that could potentially inflect a positive year-over-year growth in the fiscal first half or is that something that you'd expect more in the back half? Thanks.
Sasan Goodarzi -- Chief Executive Officer
Yeah. Thank you for your question. You know, first of all, I'll start with, you know, based on our insights and learnings from last year, you know, we really took an approach to be intentional and prudent about the guidance that we provide, which means taking into account not only a macro environment but also not just banking, a bunch of, you know, initiatives in the back half of the year. We're aggressive in the initiatives that we're working on, but we did not bake them into our guidance because we just wanted to be thoughtful and prudent.
With that, you know, as context, I would -- I love your question about Karma Guarantee because we haven't explicitly been talking about it and it's not because it's not important anymore, it's because of the way we are now thinking about it and incorporating it into several areas. One is you've heard us talk about the entire app redesign, which is far more focused on putting the right benefits in front of the customers at the right time, which we talked about at Investor Day. That, coupled with Intuit Assist. And, you know, the example I used in the -- earlier was the fact that, you know, prime customers spend literally four or five hours doing comparison shopping between credit cards because they can get whatever credit card they want, but they're looking for the perks.
Now, we can automatically do that for them based on all of the data and everything that we know about them. So, you combine the app redesign with Intuit Assist and our focus on prime customers, Karma Guarantee plays an important role helping customers, particularly those that have a hard time getting access to financial products, guarantee them that if they choose what's in front of them, that they're going to be approved for it or we'll put $50 in their bank account. So, the combination of those things is what the set of initiatives are that we are focused on that we expect will drive engagement, higher frequency, and monetization. And we've not included that in our guidance, but it's very important for the future growth of the business.
Not only that, and I'll end with this, tax is an enormous part of it. You know, we've now spent several years thinking about how does every interaction and move a customer make in the Credit Karma platform, how does that inform what that will mean to their taxes so that when it's tax time, it's a much more seamless experience, along with compelling offers. So, tax is now, as we look ahead, such an important part of the life of the member and our focus area within Credit Karma. And all of those combined is what we have high hopes for in the future.
Again, not in our guidance, but important for the future.
Scott Schneeberger -- Oppenheimer and Company -- Analyst
Excellent. Thanks for all that.
Sasan Goodarzi -- Chief Executive Officer
You're very welcome.
Operator
All right. Thank you. Ladies and gentlemen, there are no -- go ahead, sir.
Sasan Goodarzi -- Chief Executive Officer
[Inaudible] Go ahead.
Operator
There just are no further questions, so you may proceed with any additional or closing remarks.
Sasan Goodarzi -- Chief Executive Officer
Sorry to have interrupted you. I was just going to say thank you for all the questions and we look forward to hearing from everyone next quarter. Until then, be safe. Bye, everybody.
Operator
[Operator signoff]
Duration: 0 minutes
Call participants:
Kim Watkins -- Vice President, Investor Relations
Sasan Goodarzi -- Chief Executive Officer
Sandeep Aujla -- Chief Financial Officer
Raimo Lenschow -- Barclays -- Analyst
Keith Weiss -- Morgan Stanley -- Analyst
Siti Panigrahi -- Mizuho Securities -- Analyst
Allan Verkhovski -- Wolfe Research -- Analyst
Alex Markgraff -- KeyBanc Capital Markets -- Analyst
Steve Enders -- Citi -- Analyst
John Byun -- Jefferies -- Analyst
Brad Reback -- Stifel Financial Corp. -- Analyst
Kirk Materne -- Evercore ISI -- Analyst
Arti Vula -- JPMorgan Chase and Company -- Analyst
Kartik Mehta -- Northcoast Research -- Analyst
Brad Sills -- Bank of America Merrill Lynch -- Analyst
Scott Schneeberger -- Oppenheimer and Company -- Analyst