TurboTax maker Intuit buying Credit Karma in USD7.1B deal

AP – Intuit is buying consumer finance company Credit Karma in a USD7.1 billion cash and stock deal that will take it deeper into the financial products realm.

The agreement announced on Monday would bring together the maker of TurboTax, QuickBooks and other personal finance tools with one focussing on consumers’ access to financial products, such as finding the right loan or credit card.

The combined companies will aim to provide consumers with “a personalised financial assistant,” Intuit’s CEO Sasan Goodarzi said.

Credit Karma offers users free access to credit scores and information about financial products. It analyses consumers’ financial data and based on that, suggests products. Credit Karma gets paid by a bank or lender if a user gets a loan, credit card or other financial product through its system.

The company, founded in 2007 and based in San Francisco, said it has 37 million active monthly users. It generated nearly USD1 billion in revenue in 2019, according to the companies. Intuit, based in Mountain View, California, said it will pay for the deal — its largest yet — in equal portions of cash and its own common stock. The deal value includes an estimated USD1 billion in equity awards to be offered over three years.

The companies argue that many consumers struggle with not knowing or not fully understanding where they stand with their finances. With that in mind, they envision providing users access to personal financial information — such as income, spending and credit history — in one place so that consumers can better understand their financial picture and use it to their advantage. That could be finding better interest rates, getting out of debt faster or meeting a savings goal. They will also be able to see personalised, pre-approved offers on loans and credit cards.

Company leaders say consumers’ data will remain their own and users can opt not to share it to get personal offers. But if they do, as many Intuit clients already opt to, they could for example, get an offer for a high-yield savings account if they got a tax refund.

Analysts said the deal makes strategic sense and investors welcomed the news, sending Intuit’s shares up more than three per cent in after-hours trading on a particularly rough day in the markets.

Credit Karma founder and CEO Ken Lin will continue to operate the company out of its San Francisco headquarters. The companies said they expect the deal to close in the second half of 2020, pending regulatory approval.

A person looks at Intuit TurboTax software on display at a retailer in Foster City, California. PHOTO: AP