intuit, credit karma closing: Intuit : and Credit Karma Receive Clearance from Department of Justice for Acquisition of Credit Karma

Analyzing both credit data and income data from tax filings, Credit Karma can recommend financial products like personal loans and credit cards to its users. It earns a commission from banks and lenders if a user gets approved for a recommended product. Credit Karma has long been known for free credit scores, but has since launched a free tax filing platform, high-yield savings accounts, and other personal finance management products. When it launched in 2017 Credit Karma experimented with a new business model that offered a raft of free financial services, including its tax preparation software. It makes money by using the resulting customer data to offer the likes of credit cards and other financial products to over 100 million of its members. Intuit plans to operate Credit Karma as a separate reporting segment, and segment operating income includes all direct expenses.

Under the deal, Credit Karma will operate as an independent unit, continuing to be led by CEO Ken Lin, the companies confirmed on the earnings call. Intuit has agreed to acquire Credit Karma for $7.1 billion in a half cash, half stock deal. Company executives blamed the coronavirus’s effect on the economy for its move to slash compensation, the sources said. At the same time, several firms in the banking sector, including Morgan Stanley, Citi, Wells Fargo and Bank of America, have pledged not to lay off their employees for the remainder of the year. The reductions, based on seniority, range from 15% for newer workers to 50% for executives, company management said Thursday in a virtual all-hands meeting. Fintech Credit Karma, which software company Intuit agreed to buy in February for $7.1 billion, is cutting all of its employees’ pay, Bloomberg reported, citing people familiar with the matter.

We asked them if it was possible to cancel the credit monitoring service you had when you filed your claim, sign up for a new one, and still receive whatever money’s coming to you, but they declined to answer. Credit Karma has seen its sales growth slow from 48% in the third fiscal quarter of 2022 to the 10% to 15% projected by the company for fiscal year 2023, according to the report. Credit Karma Inc., a fintech company being acquired by Intuit Inc., cut the compensation of all its employees in response to the coronavirus pandemic and faltering economy, according to people familiar with the matter.

Intuit CEO’s $20 billion buying spree has put tax software company firmly on tech M&A map

We believe our non-GAAP financial measures also facilitate the comparison by management and investors of results for current periods and guidance for future periods with results for past periods. Press release, in which the company reiterated its operating income and earnings per share guidance for fiscal year 2023. The U.S. Justice Department gave the deal a green light last month on the condition that Credit Karma sells its tax business, with Square Inc. having stepped up to buy the unit. Intuit paid “approximately $3.4 billion in cash and 13.3 million shares of Intuit stock and equity awards with a value of $4.7 billion” to acquire Credit Karma, the companies said in a press release.

It combines tax-based income data with credit score data to offer consumers a similar level of financial wellness transparency that Credit Karma is known for. The acquisition will lead to “unparalleled offers on credit cards, loans and insurance,” while “the platform” will enable customers to “maximize their tax refund and connect them to high-yield savings accounts and checking accounts,” according to the press release put out by Intuit and Credit Karma. At the same time, the company reprioritized resources in ways that reflected the reality of where most growth would come from during the early months of the pandemic.

Currently, 62% of consumers are living paycheck-to-paycheck, 75% of Americans have concerns about their ability to pay bills and loans, and 33% of Americans have lost income during the pandemic while household debt in the U.S. has reached $14.3 trillion. These challenges add even greater urgency to Intuit’s and Credit Karma’s shared goal of delivering a personal financial assistant to help consumers improve their lives by finding financial products to increase savings, pay down debt and access their money faster. The result will be a complete financial profile that puts the power in consumers’ hands so they can take the steps necessary to improve their financial health and maximize their money. We are a global financial platform company with products including TurboTax, QuickBooks, Mint and Turbo, designed to empower consumers, self-employed and small businesses to improve their financial lives.

Building a true platform culture to solve customer problems

From an employee retention standpoint, the strategy paid off; when the https://1investing.in/ was announced, employee headcount was around 1,300, and when the deal closed, it stood at 1,290. Colleen McCreary, Credit Karma’s chief people officer, was tasked with helping to navigate the impact on employees. “Those covenants are written in such a way that our lawyers are looking at us and our board is calling me to say we should be really careful. Technically, if you pull back from marketing … what happened to our revenue breaches in the contract,” Lin said. Rob Clymo has been a tech journalist for more years than he can actually remember, having started out in the wacky world of print magazines before discovering the power of the internet. In the rare moments he’s not working he’s usually out and about on one of numerous e-bikes in his collection.

Both companies also stressed the benefits of the deal for consumers of a transaction that had stirred competition concerns among federal regulators. “In this challenging economic environment our priorities remain the same — supporting our employees and supporting our members,” a Credit Karma spokeswoman said in an emailed statement. Valued at $4 billion, Credit Karma has raised around $370 million in VC funding to date — its last round was a $175 Series D in 2015 — from investors including Felicis Ventures, Founders Fund, and Tiger Global Management. In 2018, it sold a $500 million stake to Silver Lake Capital in a secondary share round. The acquisition will help, Intuit, a bookkeeping software giant into the space of consumer finance.

Intuit Updates Full Fiscal Year and Second Quarter Outlook Reflecting the Close of the Credit Karma Acquisition

The purchase price will be payable in equal portions of cash and Intuit shares, which are being valued at about $299.73 per share, the company said. The deal hands Intuit access to Credit Karma’s trove of financial data on millions of Americans. With another tax season ahead in which the groups can apply lessons from the previous year, as well as improvement in products like Lightbox and Credit Karma Money, the team is poised to capitalize on Intuit’s investment in the business. The company expects that growth to continue, as it revised full-year revenue guidance for the unit to $1.540 billion to $1.565 billion, up from $1.345 billion to $1.380 billion. There were clear synergies between the Credit Karma and Intuit operations, but there was also a recognition that tightly integrating the companies and running Credit Karma products under the Intuit umbrella might not be the best way to get the most out of their strengths. We exclude from our non-GAAP financial measures the professional fees we incur to complete business combinations.

Credit Karma, which is not a part of the Free File Alliance, offers both federal and state tax filings for free to all registered users, regardless of income. The acquisition will give Intuit access to both credit and income data from Credit Karma’s 106 million users. The acquisition would help in shaping up the recommendations offered to their customers once the data is leveraged and further expanded.

But according to analysts, both companies’ competing tax filing products could prove an antitrust concern, should the deal move forward for review by regulators. Intuit expects the cash consideration to be financed through cash and its existing unsecured line of credit. The transaction is not expected to have an impact on Intuit’s existing dividend and share repurchase principles. The transaction is expected to close in the second half of calendar year 2020, subject to receipt of required regulatory approvals and satisfaction or waiver of other customary closing conditions. From time to time, we sell or otherwise dispose of selected operations as we adjust our portfolio of businesses to meet our strategic goals. In accordance with GAAP, we segregate the operating results of discontinued operations as well as gains and losses on the sale of these discontinued operations from continuing operations on our GAAP statements of operations but continue to include them in GAAP net income or loss and net income or loss per share.

• Intuit paid “approximately $3.4 billion in cash and 13.3 million shares of Intuit stock and equity awards with a value of $4.7 billion” to acquire Credit Karma, the companies said in a press release.
• Our innovative ecosystem of financial management solutions serves more than 50 million customers worldwide.
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• Taylor Tepper is a former senior staff writer at Wirecutter covering financial products and how people use them.

Following the close of the transaction Intuit will issue approximately $300 million of restricted stock units to Credit Karma employees, which will be expensed over four years. Provide insights and advice to help consumers make better decisions about their money and improve their credit score. We exclude from our non-GAAP financial measures gains and losses on disposals of businesses and long-lived assets because they are unrelated to our ongoing business operating results.

In her email, McCreary said that 500 new segment employees have joined in the past five quarters, and there are about 100 people that have either been given an offer, or accepted one and haven’t started yet. Almost all new hiring in the division will be paused as the company sees “revenue challenges due to the uncertainty of the economic environment,” Chief People Officer Colleen McCreary wrote in a letter to employees last Sunday that was shared with Bloomberg. Departing workers will continue to be replaced, and there will be no pay cuts, she wrote. However, the prospect of a deal that would unite TurboTax, a powerhouse in the tax preparation business, with Credit Karma’s own sizable consumer tax business, drew antitrust concerns from federal regulators.

The transaction would be neutral to accretive to Intuit’s adjusted earnings per share in the first year after the deal closes, which is expected in the second half of 2020. To be able to use Credit Karma money as a conduit to get you your money faster is important,” Lin said. While the acquisition didn’t result in a change in organizational structure or a combined workforce, both sides were opportunistic about finding ways in which their products could accelerate growth between them. Of course, there are some areas where the companies must integrate as part of a publicly traded company — like anything that includes financial controls or compliance — but for most people at Credit Karma, little has changed over the past year.

Intuit and Credit Karma Join Together

Our platform and products help customers get more money with the least amount of work, while giving them complete confidence in their actions and decisions. Our innovative ecosystem of financial management solutions serves approximately 50 million customers worldwide. Please visit us for the latest news and in-depth information about Intuit and its brands and find us on social. We are a mission-driven, global financial platform company with products including TurboTax, QuickBooks, and Mint, designed to empower consumers, self-employed and small businesses to improve their financial lives. Our innovative ecosystem of financial management solutions serves more than 50 million customers worldwide.

According to Goodarzi, part of the reason the DOJ review took so long was that the agency was really trying to understand how the two companies fit together and what it would mean for consumers, specifically in the tax area. Ultimately, the Justice Department ruled the companies would have to divest Credit Karma Tax to move forward with the acquisition. It stopped recruiting, stopped trying to backfill jobs and turned off any paid marketing. At the same time, the organization worked hard to reassign employees whose jobs were not in demand or necessary during the slowdown — including those in human resources and talent acquisition. Those decisions were complicated by covenants in the acquisition agreement Credit Karma signed, which said the company couldn’t dramatically alter its business while the deal was undergoing regulatory review. According to those inside the company, revenue dried up virtually overnight in the early days of the pandemic.

“We appreciate intuit, credit karma closing‘s pursuit of growing its consumer finance platform and view the proposed addition of Credit Karma a logical strategic expansion,” Oppenheimer analyst Scott Schneeberger said in a statement. Intuit is also the parent company of Mint, another personal finance startup it acquired in 2009. Intuit is a member of an industry group known as the Free File Alliance, which partnered with the IRS to provide those with income under $69,000 per year access to free federal tax returns via the Alliance members’ platforms. It’s worth noting that these platforms can still charge for state returns, and Intuit has come under scrutiny for its lobbying against free government-sponsored tax filings. Instead of charging consumers for its products, Credit Karma makes money with user data.

For cost savings, you can change your plan at any time online in the “Settings & Account” section. If you’d like to retain your premium access and save 20%, you can opt to pay annually at the end of the trial. The two companies’ tax products have been highlighted as a possible antitrust concern if a deal were to be reviewed by regulators.