San Francisco-based Intuit (NASDAQ: INTU) is on an M&A shopping spree, and its biggest recorded deal yet is its $7 billion plan to purchase credit monitoring startup Credit Karma. Intuit's Sasan Goodarzi is fresh into his first year as CEO and has grand plans for building up the company into a resource that customers can turn to for all their financial needs. As the provider of products TurboTax and Mint, the addition of the new fintech will help the company expand further into the credit space and round out its offerings.
“This really gives us the opportunity together to create a consumer finance platform that truly acts like a financial assistant in the pockets of consumers… the capability that Ken and his team have created at Credit Karma really helps to accelerate our speed to market,” Goodarzi said.
In addition to offering credit scores, the company provides credit card products and loan services. Credit Karma makes money off the offerings that users obtain through the platform, and business has been good. One of the reasons Credit Karma is so attractive is the platform's ability to sift through a customer's financial data and pick out the right credit products for personalized user experience. This targeting ability was one of the critical reasons that Goodarzi picked up on Karma's potential within Intuit's broader portfolio. It's all about the data, and Karma's addition to Intuit's collection will help them build the AI tools to connect the right products and services with the right customers.
Some have speculated that Intuit is ramping up its merger and acquisition strategy, but the CEO denies any plans of the sort. It's not about the deals it's about how to move the company towards its goal. "We're not after megadeals," Goodarzi said. “We’re after really accelerating, solving our customer problems and time to market. And it just so happens that Credit Karma has created something that very few have and together we can accelerate the benefits for customers.”
Intuit investors have cause to celebrate with this deal, but it might not be smooth sailing. Given that Intuit and Credit Karma can be considered competitors in some areas, the tax software provider might run afoul of antitrust regulators with its attempt to snap up smaller fish Credit Karma. Companies like Google (NASDAQ: GOOGL), Facebook (NASDAQ: FB), and Apple (NASDAQ: AAPL) have recently been subject to investigations by the likes of the Department of Justice and Federal Trade Commission. The strategy moving forward, Goodarzi said, is to be forthcoming with the information requested by federal regulators.
If the transaction goes through, plans are that Credit Karma will continue to operate independently with its current CEO in place. The fintech was founded in 2007 by Kenneth Lin, Nichole Mustard, and Ryan Graciano. The company is at 100 million users, with 30 million who access the site weekly. Over 1,100 staff currently work with Credit Karma.
Photo by Austin Distel on Unsplash
Sources:
https://www.businessinsider.com/intuit-credit-karma-acqusition-sasan-goodarzi-kenneth-lin-2020-2
https://www.businessinsider.com/intuit-credit-karma-deal-artificial-intelligence-data-analyst-2020-2
https://www.bloomberg.com/news/articles/2020-02-24/intuit-buys-credit-karma-for-7-1-billion-in-cash-stock?sref=Z8rrm62K
https://www.nytimes.com/2020/02/23/business/credit-karma-intuit-deal.html
Disclaimer: The writer is an experienced financial consultant who writes for Finscreener.org. The observations he makes are his own and are not intended as investment or trading advice.
