Intuit CEO: Government's free e-file software not 'a great use of taxpayer money'

The IRS is getting ready to test a new, free tax e-filing system. However, Intuit's CEO is not a fan. In interview with Yahoo Finance Live, Sasan Goodarzi says there are already free e-filing programs available to taxpayers and that he thinks a new one from the government is not "a great use of taxpayer money." Goodarzi is more positive on AI however, saying that next to electricity and the internet, "AI is the biggest platform that will ignite innovation across every single industry." He highlighted Intuit's Mailchimp, which recently launched an email content generator which uses generative AI.

Video transcript

- Intuit the parent company of brands like TurboTax and Credit Karma sheds light on financial needs for consumers and small businesses. From economic uncertainty to potential cuts in funds for the IRS, there's quite a bit at play for the financial tech platform.

Here to discuss this and more is Intuit CEO Sasan Goodarzi along with our Yahoo Finance's Brian Sozzi. So, Sasan, let's start with this. Let's start with the debt ceiling deal that's going to be voted on today. What does that signal for your business?

SASAN GOODARZI: Well, first of all, thank you for having me. Great to see the both of you. Well, we're just happy for the country, because we don't want the country to go into default. In terms of impact to our business, I think it doesn't have any impact other than it's important for the United States not to go into default. And we think that's a really good thing. And we're happy that there's a deal being cut, and we can move on as a nation.

BRIAN SOZZI: Sasan, Brian here. Good to see you as always, I think. you know, I read like eight notes before we report earnings a couple weeks-- a couple, I believe, last week on how this free e-file system that the government may stand up may impact your business. But, I mean, come on, can the government get a website right?

[LAUGHS]

SASAN GOODARZI: It's good to see you, Brian. You know, our perspective has been consistent in the last 10 plus years. First and foremost, free software already exists for all Americans. And this will yet be another free tax software. We don't think it's a great use of taxpayer money given the existence of free tax software. And so it's really not an event for us as a business. It's not material at all for us.

And I'll just remind us that in the last several years, there's been two huge entrants into the space. One, before we acquired Credit Karma which has well over 120 million members, they chose to get into the tax business, and they really had very little impact. And they were all free. And then the company that we sold, the Credit Karma tax too, once we acquired Credit Karma also provides free tax software, and it's not had a huge impact. So the point is free software already exists. For the government to create yet another free software does not make an impact to our business.

- So I got to ask you. One of the big buzzwords that we've talked about a lot lately and in recent months is AI. Some companies are all in on AI. Just about every company talks about how they're incorporating it in their business, including companies that you wouldn't even think of like the Pepsi. So where do you all stand? Are you all in? Or there is also the camp that is kind of warning about the dangers of AI, where do you all stand as a company on AI and how you'll be using it in your business?

SASAN GOODARZI: Yeah, first of all, you know, I've been on the record. It's been almost been five years ago that I believe and we believe as a company that next to electricity and the internet, AI is the biggest platform that will ignite innovation across every single industry. And particularly with generative AI, we believe that it will create new companies. Existing companies can get disrupted. And depending on how you choose to leverage it, it's an enormous opportunity.

And I think the opportunity first starts with data. And when I think about Intuit and what we are focused on for our customers-- You know, we have a 360 view of our customers. And I'll just use a small business as an example. You know, small business of, you know, 10 people, they have to do a lot of work to figure out how to manage their customers, how to get new customers, how to sell more services to the customers that they have, knowing which ones are profitable customers, which products are profitable, and then being able to manage their cash flow.

And the power of AI is with all of the data that we have-- we see all the money coming in, all the money going out, and all the transactional data, we have customer data and purchasing data-- we're actually able to automate what a small business needs to do today by helping put marketing campaigns together for them that they can edit, confirm, and have it run, and have it-- help them understand how did that campaign produce results, where is there an opportunity to produce better results to be able to understand how to manage their cash flow, to get access to capital when needed.

And with data and with AI, you really have the opportunity to be the platform that fuels the success of small businesses, and the same thing holds true for consumers. So we are huge believers of AI particularly knowledge engineering, machine learning, and now generative AI. And I don't think it's hype.

Now there are dangers with any technology that you have to be thoughtful about, you have to have governance around, you have to have standards around. But this is the real deal, and I think that it will deliver benefits in ways for customers that we could never imagine possible, and it's very exciting from our perspective.

BRIAN SOZZI: Sasan, out of your two marquee businesses-- let's stay with Mailchimp and TurboTax-- where will AI play the biggest role, and how do you monetize that?

SASAN GOODARZI: Well, I'll start with Mailchimp. With Mailchimp, one of the things we recently launched is email content generated that's all fueled by data, machine learning, and generative AI. What that means is we, in essence, will generate the content for a customer to be able to market to their customers.

I'll stick with email for a moment. We'll propose to them a title that we know works very, very well from behavioral and longitudinal data that we have across millions of small businesses. Plus based on what services they want to sell, we'll pull together what the actual campaign will look like, and all they have to do is edit it, review it. It's all done for them proactively.

And to ensure that they're comfortable with it, they hit send. And not only do we now auto-generate it, but we can come back to the customer and help them understand how many people viewed it, how many people actually made a purchase-- those that didn't make a purchase, who are they, what services do they have-- to give them segment reporting that then they can generate, and we can generate for them automatically the next sort of generation of marketing. So that's a very specific example for Mailchimp.

Let me go to TurboTax, and then I'll answer your question about the monetization. One of the elements of our investments that started five years ago in context of AI was what we call knowledge engineering. And knowledge engineering, in essence, turns rules and the relationship between all the data that we have and the specific data that we have for the customer into code and into recommendations and so a lot of the way we produce our code across the TurboTax platform, the questions we choose to ask customers, the areas where we choose not to engage the customer. And then when we bring an expert to engage the customer, it can be a bot, it can be a human being, and all of that is driven by AI.

And in fact, two years ago, we had a generative AI launch where when an expert is engaging a customer, the entire conversation, the call summary, everything is captured. And the expert doesn't have to do that work, it's captured in the system. They can also cut and paste what they need and follow up with the customer.

That is all based on knowledge engineering, machine learning, and now generative AI capabilities. And it really drives automation. And the biggest opportunity for us is to disrupt the assisted segment. It's labor intensive, it's a lot of manual work, a lot of documentation capture. With our investments in AI, it's going to help us accelerate the disruption of those that need help to do it digitally anywhere that they wish.

To your question around monetization, and I'll end with this. You know, we often talk about the fact that we have a $300 billion total addressable market and our penetration is 5%. And although our company has been growing double digits, it's what excites us about the next 10 years.

Now why is penetration so hard? You're dealing with people's money, right? You're trying to help a small business grow their customers, manage their cash flow. You're trying to help a consumer save money, get out of debt, get their taxes done. And when it comes to money, people are fearful of are they doing it right? Are they confident in their decisions?

And for us, all of our AI investments over the last five plus years and now our acceleration with generative AI actually helps us make things more personalized, more humanized, more engaging. That therefore allows us to penetrate at a accelerated rate which results in growth for the company.

So we see it as a disruption to accelerate penetration and to disrupt the mid-market and the upmarket that we're focused on serving. We don't see it as we'll monetize generative AI only and some customers don't get it. We see it as a fuel for our entire platform.

- All right. Well, we will have to leave it there for today. Intuit CEO Sasan Goodarzi and Yahoo Finance's own Brian Sozzi, our thanks to both of you.