Small Business. Brad Smith SVP/GM, Small Business Division

Transcription

1 Small Business Brad Smith SVP/GM, Small Business Division

2 Forward-Looking Statements These presentations include forward-looking statements. There are a number of factors that could cause our results to differ materially from our expectations. Please see the section entitled "Forward-Looking Statements" in the enclosed Appendix for information regarding forward-looking statements and related risks and uncertainties. You can also learn more about these risks in our Form 10-K for fiscal 2006 and our other SEC filings, which are available on the Investor Relations page of Intuit s website at We assume no obligation to update any forward-looking statement. Non-GAAP Financial Measures These presentations include certain non-gaap financial measures. Please see the section entitled "Non-GAAP Financial Measures" in the enclosed Appendix for an explanation of management's use of these measures and a reconciliation to the most directly comparable GAAP financial measures.

3 Today s Discussion Big Market Opportunity: High Share/ Low Penetration Big Upside In Our Existing Businesses Big Opportunity To Solve Additional Important Problems And Build New Businesses

4 Small Business Division QuickBooks Financial Management Solutions Small Business Payroll Innovative Merchant Solutions Payments

5 Building On FY 06 Momentum FY06 YOY Change Revenue QuickBooks $535M +6% Payroll & Pmts $462M +24% Total SBD $997M +14% QB Units Sold 1,555K +14% QB New Users ~600K +17%

6 Accelerating New User Growth QuickBooks Estimated New Users (000 s) 600K 500K 400K 300K 200K 100K 0K FY01 FY02 FY03 FY04 FY05 FY06

7 Driving Customer Lifetime Value Five-Year Revenue Per QB Customer ($) Initial Software Purchase Add-ons and Upgrades + = 3X the Software Purchase $ Per Customer QB Software Add-on Products & Services Upgrades Total

8 New Insights => Increased Opportunity New strategy effort has deepened market understanding 9,500 small businesses surveyed 200 in-depth interviews 10,000 hours in follow-me-homes Increased confidence in our growth potential Identified many new opportunities we can solve Energized teams focused on these opportunities Moving quickly to capitalize build, buy and partner

9 The U.S. Small Business Market There are 26 Million small businesses M 30 TOTAL BUSINESS UNIVERSE ~2M ~26M 25 ~17M ~7M 5 0 Source: Intuit estimates Contract Workers 1-5 EEs >5 EEs Total Businesses

10 The U.S. Small Business Market There are 26 Million small businesses 10M new businesses incubate & 6M launch each year M 12 ANNUAL BIRTHS AND DEATHS OF BUSINESSES 10 ~10M 8 6 ~6M M M 0 Source: Intuit estimates Individuals considering starting a business at any point New businesses started each year Business deaths each year Net Annual increase

11 Faster Growth Via Deep Understanding Two variables are highly predictive defining the Me s that we serve: 1. The work we do: number of jobs types of jobs 2. How we do the work: delegation automation ~22 Million ~3 Million ~600 Thousand Home & My Business Main Street Mid Market Accountants

12 Home & My Business Firms Two variables are highly predictive defining the Me s that we serve: 22 Million Firms 1. The situation I/we are in: number and frequency of jobs Often fewer than 5 employees business scale complexity Needs are fewer and more simple Owner is hands on does not delegate 2. How I/we manage complexity: DIY, do-it-with-assistance, departments automation Home & My Business Main Street Mid Market Accountants

13 Home and My Business High Share/ Low Penetration 30% Primary Financial Management Method 25% 24% PERCENT OF FIRMS 20% 15% 10% 18% 14% 11% 9% 5% 5% 0% Manual Spreadsheet QuickBooks Quicken Online Banking Accountant Remaining market methods: Home & My Business MSFT Money (3%), MSFT Word (3%), Various FMSW (<1% each), other (4%) Source: Intuit estimates

14 Home and My Business Better Than Leading Alternatives 60% Net Promoter Score 40% 43% 37% 34% 26% NET PROMOTER SCORE 20% 0% -20% -40% Online Banking QuickBooks Quicken Accountant 0% Spreadsheet -60% -74% -80% Manual Source: Intuit estimates

15 Home and My Business Current Top Penetration 10 Jobs To Of Be Intuit Solved Solutions Tracking A/R 79% Recording sales 89% Issuing invoices 73% Tracking expenses Organizing files 92% 94% Tracking customer info 63% Tracking projects 71% Preparing bids / quotes 60% Alternative Solution Scheduling ees / resources Reviewing A/P 48% 71% Intuit Solution Percent of total firms 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Source: Intuit estimates Percent of total firms

16 New Insights => Increased Opportunity Home & My Business New Business Leader Role Quicken Home & Business Opportunity QuickBooks Online Edition +60% FY 06 User Growth Simple Start Outsells #2 Competitor s Line (Retail) Lots Of New Stuff In The Pipeline & Early In-Market New Focus Strong Position Big Untapped Opportunity

17 Main Street Firms Two variables are highly predictive defining the Me s that we serve: 3.2 Million Firms 1. The situation I/we are in: number and frequency of jobs Usually between 5 20 employees Roughly a dozen important jobs Owner begins to delegate key tasks business scale complexity 2. How I/we manage complexity: DIY, do-it-with-assistance, departments automation Home & My Business Main Street Mid Market Accountants

18 Main Street High Share/ Low Penetration 40% 35% 36% Primary Financial Management Method PERCENT OF FIRMS 30% 25% 20% 15% 13% 13% 10% 9% 5% 4% 4% 0% QuickBooks Spreadsheet Accountant Quicken PeachTree Online Banking Source: Intuit estimates Remaining market methods: Main Street Manual (5%), MSFT Word (2%), Various FMSW (<1% each), other (4%)

19 Main Street Better Than Leading Alternatives Net Promoter Score 50% 44% 40% NET PROMOTER SCORE 30% 20% 10% 0% -10% QuickBooks 25% 22% 14% 5% PeachTree Quicken Accountant Online Banking -14% -20% Spreadsheet Source: Intuit estimates

20 Main Street Current Top Penetration 10 Jobs To Of Be Intuit Solved Solutions Reviewing A/P Recording sales Invoicing and A/R Scheduling Customers 89% 88% 84% 80% Tracking customer info Managing Projects Preparing bids / quotes 69% 68% 67% Tracking employee time Tracking sales leads Updating info on website 56% 56% 62% Alternative Solution Intuit Solution Percent of total firms 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Source: Intuit estimates Percent of total firms

21 New Insights => Increased Opportunity Main Street 90% Retail Share But Only 45% Market Penetration Even Where Penetrated Lots Of Jobs Still Underserved Big Focus On Ease The Clear Leader But Can Do Better Industry Functionality Inventory Time Tracker Accountants New TV Advertising Campaign for 2007 Building Momentum Playing Offense Lots Of Runway

22 Mid-Market Firms Two variables are highly predictive defining the Me s that we serve: 600 Thousand Firms 1. The situation I/we are in: number and frequency of jobs Usually Between Employees business scale complexity Dozens Of Important Jobs & Workflows Delegation Becomes Formal - Departments 2. How I/we manage complexity: DIY, do-it-with-assistance, departments automation Home & My Business Main Street Mid Market Accountants

23 35% Mid-Market High Share/ Low Penetration Primary Financial Management Software 30% 29% PERCENT OF FIRMS 25% 20% 15% 10% 14% 11% 7% 5% 4% 4% 0% QuickBooks Custom Excel PeachTree MAS90 Great Plains Remaining market methods: Mid-Market All Vertical Solutions (10%), 80+ horizontal apps (8%), Assorted MSFT (6%), other (<1% each) Source: Intuit estimates

24 Mid-Market Better Than Leading Alternatives Net Promoter Score 20% 10% 10% 7% 6% NET PROMOTER SCORE 0% -10% -20% -30% QuickBooks MAS90 Excel -8% Great Plains -34% -39% -40% PeachTree Custom -50% Source: Intuit estimates

25 Mid Market Current Important Penetration Jobs Of To Intuit be Solved Solutions Recording sales 82% Managing customer info 85% Managing sales and marketing 79% Purchasing / procurement 74% Human resources 73% Inventory management 72% Managing the delivery of services 70% Ecommerce Manufacturing 46% 54% Alternative Solution Intuit Solution Percent of total firms 0% 20% 40% 60% 80% 100% Source: Intuit estimates

26 New Insights => Increased Opportunity Mid Market QBES Revenue Growth +97% In Fiscal Year 2006 #1 Market Position (Units) After < 5 Years In The Market Better Customer Value 1/10 th Price Of Competition Mid-Market User Conference Solution Provider Program We see a huge opportunity because mid-market market companies have been chasing complexity up market, and it leaves customers behind with no appropriate solution. We can disrupt the current mid-market market players and their business model.

27 Driving Customer Lifetime Value Five-Year Revenue Per QB Customer ($) Initial Software Purchase Add-ons and Upgrades + = 3X the Software Purchase $ Per Customer QB Software Add-on Products & Services Upgrades Total

28 Maximizing Customer Lifetime Value PAYROLL PAYMENTS

29 Home & My Bus. Big Opportunity: Payroll & Payments Accept Credit Cards Payroll % Current Of Small Penetration Businesses Of Conducting Intuit Solutions Activity.9% 2.5% 20.9% % Main Street Accept Credit Cards Payroll.8% 13.4% 51.1% 89.5% Mid Market Accept Credit Cards Payroll 1.3% 14.3% 66.9% 100% Source: Intuit estimates

30 Maximizing Customer Lifetime Value PAYROLL PAYMENTS

31 Small Business Payroll Market High Share: Intuit has more customers than ADP or Paychex Low Penetration: <10% of total market <40% QB penetration 80% 9.6M Firms < 50 Employees Customer Segments Estimated # Of Firms 60% Higher Priced Alternative Methods Can t Be Bothered (CBB) 3.0M 40% 4.1M 20% 0% Software Competitors 2.0M Intuit - 0.9M Non Consumption Self-Directed with Assistance (SDA) Self-Directed (SD) 3.5M 3.1M 6.6M Firms * -20% 2.6M * 75% are non-qb -40% Source: Intuit estimates

32 Small Business Payroll Better Than Leading Alternatives 60% 54% Net Promoter Score 50% 46% 45% 45% NET PROMOTER SCORE 40% 30% 20% 10% 0% -10% QB Assisted Payroll QuickBooks DIY Payroll ADP Paychex 33% Intuit Complete -20% Source: Intuit estimates

33 Continuing Track Record of Growth Small Business Payroll Customer Growth QB DIY Payroll QB Assisted Payroll 1,000K 40K 800K 30K 600K 20K 400K 200K 10K 0K FY00 FY03 FY06 0K FY00 FY03 FY06

34 New Insights => Increased Opportunity Small Business Payroll New Leader And One Payroll Business Emphasis On Acquiring New Users & Monetizing Attach Single-Minded Focus ACE (Accuracy, Confidence, Ease) Assisted & OE Payroll Ramping New Offerings Coming Strategy Is Clear Strong Market Position Now Execution!

35 Maximizing Customer Lifetime Value PAYROLL PAYMENTS

36 Favorable Market Trends US Consumer Transaction Volume ($ Billions) $10,000 $9,000 $8,000 $7,000 $6,000 $5,000 E-check Bank Trans. Stored Value Debit Cards CAGRs Cons. ACH 25% 130% Stored Value 50% 21% $4,000 Credit Cards Debit Card 32% 18% $3,000 $2,000 Cash Credit Card 17% 9% $1,000 $- Check Checks 6% -5% Actual Estimates Source: The Nilson Report, 2004

37 Significant Growth Runway Credit Card Penetration By QuickBooks Users Accept credit cards with non-ims service 80 Use IMS PERCENT % 51.1% 66.9% Doubling penetration of QuickBooks base alone will increase IMS revenue by 50% 10 0 Home & My Business 0.9% Main Street 0.8% 1.3% Mid Market Source: Intuit estimates

38 Net Promoter Results Strong Net Promoter Web Survey Results Detractor Promoter Competitors -14 QBMS Source: Intuit estimates

39 How Our Business Model Works QuickBooks Customers Non- QuickBooks Businesses 1. Attract New Customers To The Franchise 2. Monetize The Relationship a) Flat Fee b) Transaction Volume

40 Payments Customer Growth IMS Customers (000 s) 200K K 100K 106 IMS K 0K FY00 FY01 FY02 FY03 FY04 FY05 FY06

41 Our Payments Vision For Continued Growth Enable merchants to accept every form of payment Credit, debit, and pre-paid cards Check guarantee, check conversion, check verification ACH Satisfied merchants = Greater adoption & retention Enhance end-to-end customer experience One application & approval process One portal with self-service tools One 800# with live operators Every transaction in QuickBooks Build, Buy, Partner For New Technology & Customer Access

42 Small Business Market Trends Big Opportunity To Solve Additional Important Problems And Build New Businesses

43 Market Trends Pain Points Getting customers & getting paid #1 job Ease is still the #1 must do in a solution Technology Broadband is everywhere everyone s online 80% small businesses have mobile EE s SaaS is growing, but still small today Competition Traditional competitors evolving Online Banking Payments Web Services New Models Ads Open Platforms Free Value Propositions Global Many QB customers do business outside U.S. 325M small businesses outside of the U.S. # new non-u.s. biz started 17x # in the U.S.

44 Capitalizing On Key Market Trends Solving New Problems Embracing Technology ATTRACT NEW CUSTOMERS with MARKETING TOOLS New Business Models Acquisition & Partners

45 Google & Intuit Alliance: Solving New Important Problems Delivering four new services for customers in QB 2007 Help small biz acquire customers be found on the Web: 1. AdWords sign-up and account management 2. Local listings on Google 3. Product listing service Find information quickly and easily in QuickBooks (on desktop too!) 4. Integrated search of QuickBooks data powered by Google

46 SuperNav with Google Included

47 Google Marketing Tools Landing Page

48 QuickBooks Search Powered by Google

49 Today s Discussion Big Market Opportunity: High Share/ Low Penetration Big Upside In Our Existing Businesses Big Opportunity To Solve Additional Important Problems And Build New Businesses

50 Closing Thoughts Significant New Learning Strategy Is Clear Winning Today s Game & Embracing The Future Talented Leadership Team Strategies Don t Move Mountains, Bulldozers Do -Peter Drucker Confirming FY07 Revenue Growth Guidance: QuickBooks 8-12% Payroll/ Payments 12 16% 16% And Confident About Future Growth