Window paint that says "Pay your tax now here"
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Intuit’s earnings are so good it’s a scandal

Protocol Fintech

Good morning, and welcome to Protocol Fintech. This Wednesday: Intuit’s strong earnings, Adam Neumann’s fintech second act, and hotel rooms as NFTs.

Off the chain

Protocol Fintech keeps growing. Ryan Deffenbaugh has joined us as a New York-based reporter, where he’ll cover Wall Street, the city’s fintech startups and other news. He’s already written about Adam Neumann’s new crypto career, a story included in today’s edition.

— Owen Thomas (email | twitter)

Maybe the scandal is how well Intuit’s doing

The biggest stories about Intuit lately haven’t been good for its image — among consumers or employees. State attorneys general settled with Intuit over charges that it offered a free version of TurboTax, which Intuit advertised prominently but made difficult to find online. The company coughed up $141 million in a settlement to 4.4 million taxpayers while admitting no wrongdoing. And its acquisition of Mailchimp — which struck many as having an unclear strategic rationale — was marred by Mailchimp employees’ fury at being left out of the $12 billion windfall. A round of pay raises in April reportedly didn’t lift morale.

In yesterday’s earnings call, Intuit delivered some good news for another constituency: its investors. The company’s fiscal third quarter is tax season, always a boom time for Intuit. Revenues of $5.6 billion were up 35% year-over-year (29% without Mailchimp), and at least $100 million over analysts’ expectations. Operating income was also up 25%.

  • Wall Street doesn’t seem worried about the free-filing crackdown. There was barely any mention of the free-filing scandal or the risk of the IRS developing its own online-filing tools.
  • GAAP earnings per share were $6.28, with the settlement expected to reduce the current quarter’s earnings by 37 cents. “We are pleased to put this issue behind us,” said CFO Michelle Clatterbuck.
  • The Mailchimp acquisition turbocharged the company’s small-business services division, helping diversify its tax-heavy revenue picture.

Investors were concerned about what’s to come. The uncertain markets dominated the Q&A session.

  • However, CEO Sasan Goodarzi seemed unconcerned. “We are the best-positioned to serve consumers and small businesses in tough times,” he said.
  • He has a point: Intuit seems to have a recession-resistant business model. In 2008, the company outperformed the broad stock market, and Intuit has since diversified into services, which customers need in good times and bad.
  • It nudged up its guidance for growth in the current fiscal year, though an earlier tax filing means its current quarter will see revenue fall.

The free-filing scandal still haunts the company. Despite the state settlement, an FTC case against Intuit is still active.

  • Intuit said the FTC’s claims were “simply not credible” and has also argued that the 50-state settlement makes the FTC case pointless, because it has already agreed to change its practices.
  • In a technical move, Intuit moved to have the case withdrawn from adjudication, and the commission agreed. The relevant rule requires the commission to consider now whether further litigation is in the public interest.

The recession is probably a bigger worry. A growing number of analysts and bankers are issuing doom-and-gloom forecasts, but it’s not a sure thing. Goodarzi told analysts Tuesday that Intuit is “the best projector of the overall economy because of all the data that we see.” If that’s the case, then maybe Intuit’s bullish earnings can be taken as a rare moment of optimism for all of us.

— Veronica Irwin (email | twitter)


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On the money

On Protocol: A new report by a16z is seeing tech valuations in general going down, with the fintech sector in particular hit the hardest. Experts’ advice: “Reevaluate your valuation, understand your burn multiples, and build scenario plans.”

Coinbase expanded its Travel Rule solution and membership internationally. The Travel Rule Universal Solution Technology, also known as TRUST, has now gone live in Canada and Singapore, with plans to expand into Europe. TRUST membership entities have also expanded globally.

The CFPB is revamping its innovation unit. The Consumer Financial Protection Bureau created the Office of Innovation and Competition to replace its old Office of Innovation, which will reportedly more broadly promote innovation and identify threats posed by Big Tech to smaller companies.

Some hotels are converting excess rooms into NFTs. Customers can reserve rooms by buying an NFT, but if they decide not to go, they can sell or swap the reservation as an NFT instead of asking the hotel for a refund. Which is a fancy Web3 way for the hotel to not give you your money back.

A WeWork founder finds his next act in fintech

Ousted WeWork founder Adam Neumann is moving into crypto.

Flowcarbon, which counts Neumann and his wife Rebekah as co-founders, said Tuesday it has raised $70 million combined in venture funding, led by Andreessen Horowitz's crypto fund and including a token sale. The startup hopes to sell tokenized carbon credits on the blockchain.

Companies use the credits to offset greenhouse gas emissions. A16z projects the market for such credits could reach $50 billion by the end of the decade, citing data from McKinsey, but the voluntary markets used to track those credits currently are "fractured, opaque and gated," wrote Arianna Simpson, a general partner at the firm.

Flowcarbon sees the blockchain as the best way to connect buyers of credits with developers of projects that create the offsets, with a focus on nature-based carbon removal efforts such as reforestation.

Read the full story on

— Ryan Deffenbaugh (email | twitter)

Just one question for Matt Homer, executive in residence at Nyca Partners

Before joining Nyca Partners in 2021, Homer was the founding leader of the New York State Department of Financial Services’ Research and Innovation Division. He also headed up policy at Quovo, which was bought by Plaid.

What’s something new you’ve learned about lately that inspired you?

Lately I’ve been digging into history about the Knights Templar. There was this period after the Roman Empire fell where people had to figure out who was going to control the money system. The Knights Templar were the people that fought the Crusades — that’s what they’re best known for. But they also controlled a lot of the trading routes and castles. They were basically the BNY Mellons of the medieval era.


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Thanks for reading — see you tomorrow!

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