Main Street remains the soul of America, but the small and midsize-business (SMB) market is facing headwinds.
This, as executives at Intuit, the financial technology platform that makes TurboTax, Credit Karma, QuickBooks, and Mailchimp, told company investors and analysts on Thursday’s (Feb. 23) second quarter 2023 earnings call that in uncertain macro environments, the benefits of its platform for SMBs are becoming more clear than ever before.
“We want Intuit to be looked to as the key authority for what’s happening in the SMB space,” said Sasan Goodarzi, Intuit’s chief executive officer.
“We had a strong second quarter as we executed on our strategy to be the global AI-driven expert platform powering prosperity for consumers and small businesses,” the CEO added. “As we celebrate our 40th anniversary this year, we are proud of our history of thriving during various economic cycles and we are confident that the benefits of the Intuit platform are more mission-critical than ever to our customers.”
Intuit executives pointed to strong growth in the number of SMBs using Intuit’s solutions to run their online payroll, as well as the total number of employees being paid through the platform, as an indication that its renewed focus on the SMB market was working.
The company’s QuickBooks Online Accounting revenue grew 27% in the second quarter 2023, with customer growth as a key driver.
“Small business continues to be very strong,” Goodarzi said. “The ongoing shift to digitization and the power of our SMB platforms really resonates with customers as they grow their business.”
Intuit’s overall SMB and self-employed lines of business across its suite of services grew revenue for the quarter by 20% to $1.9 billion.
The CEO pointed to the fact that while the success rate of SMBs leveraging Intuit’s enterprise suite was 10 points better than the industry the prior quarter, it grew to a full 15 points higher for the most recent fiscal quarter when benchmarked against those SMBs not using Intuit’s services.
“SMBs on the platform are more successful, they are digitizing and leveraging the opportunities of new tools to continue delivering for their customers,” he said. “Our platform is really mission critical to the SMB industry to grow customers, manage customers, pay their employees — it fuels their success.”
Research in the PYMNTS report, “Tapping the Payments Opportunity in SMB Retail,” finds that SMB survival may hinge on their adoption of digital payment options and a broader adoption of modern solutions to keep pace with their customers’ expectations.
“It’s all about digitization,” Goodarzi said to investors on the earnings call. “We expect [the SMBs on Intuit’s platform] to continue to be successful in this macro environment and we will continue to support them.”
Read more: How SMBs Can Use Payments Innovation to Spur Growth
He noted that Intuit’s payment-enabled invoice products are growing, and added that further SMB innovations are continuing to drive digitization.
“If you go back to last quarter,” Goodarzi said, “SMBs generally still had strong cash reserves that they were using to re-invest back into their businesses. This quarter, everyone has ticked up in performance and we’ve seen improvements in areas that were previously hit the hardest.”
PYMNTS and NCR’s report “Digital Banking Rises To Meet SMB Needs,” showed that as SMBs raised prices last year to meet higher supplier and operating costs, many SMBs began looking elsewhere for new sources of working capital from nontraditional sources, including digital-only banks and next generation FinTech platforms, as opposed to traditional financial institutions.
Three in four (75%) SMBs with working capital needs are the most likely to use a digital-only bank.
Intuit also announced on the call a changing of the C-suite guard.
Michelle Clatterbuck, who served as the company’s CFO going back to February 2018, will step down from her position as CFO on July 31. She has been with Intuit for 20 years and will be retiring.
“Michelle has had tremendous impact during her tenure as CFO, with Intuit’s market cap and revenue more than doubling,” Goodarzi said.
The company named Sandeep Singh Aujla as her successor. He will take the role on Aug. 1, capping off a seven-year career at Intuit that saw in lead the finance team as a senior vice president for Intuit’s largest business unit, the Small Business and Self-Employed Group (SBSEG).
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