- Intuit is in talks to buy Credit Karma for $7 billion, according to The Wall Street Journal.
- A Wall Street analyst says the deal could give Intuit's artificial intelligence effort a needed boost.
- UBS analyst Jennifer Swanson Lowe says that Credit Karma has vast amounts of customer financial data that would help it make Intuit products like TurboTax and QuickBooks smarter.
- CEO Sasan Goodarzi previously told Business Insider that he sees the potential AI can on Intuit's business and that the company is investing in the space.
- If it goes through, the deal would be Intuit's largest acquisition ever, and the first big deal since Goodarzi took over as CEO.
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Intuit is in talks to buy Credit Karma for $7 billion, according to The Wall Street Journal, and analysts say the deal could provide the boost Intuit needs to ramp up its artificial intelligence offerings. The news comes ahead of Intuit's quarterly earnings report on Monday afternoon.
AI has been a focus for the bookkeeping-software company since its new CEO Sasan Goodarzi took over a little over a year ago. Goodarzi previously told Business Insider that he sees the potential AI can have to remake Intuit's entire business - and indeed if it goes through, the deal would be Intuit's largest acquisition ever, and the first big deal since Goodarzi took over as CEO. Intuit and Credit Karma were not immediately available for comment.
UBS analyst Jennifer Swanson Lowe notes that AI is core to Intuit's business, and Credit Karma - which helps customers track their credit scores and other financial information - has a lot of the data that the company needs to make products like TurboTax and QuickBooks smarter.
"With 100M members and a service built on using customer data to drive targeted offerings, we think Credit Karma can accelerate Intuit's AI efforts and open up new opportunities to build data-powered services," Lowe writes in a research note published Monday morning.
Goodarzi had said that the company has explored the possibility of making products like TurboTax available for free, instead using a business model where the software presents users with fine-tuned, personalized offers for other financial services. Credit Karma's data could help make sure that Intuit is on-target with those offers.
To that end, the two companies have actually been competing in some areas: Credit Karma already offers a free tax-filing service to compete with TurboTax, using a similar model to the one that Goodarzi has envisioned for Intuit. Meanwhile, Intuit has its own Intuit Turbo, a free credit score-checking service to compete with Credit Karma.
If acquired, Credit Karma would stay as a standalone unit and keep its CEO, the Wall Street Journal reported. Lowe said that reduces the risk of the deal, because Intuit doesn't have a history of experience with mergers and acquisitions.
She notes though, that this potential deal means that Goodarzi will have a more aggressive approach to acquisitions than past CEOs, which carries its own risks and rewards as Intuit tries to break into new markets.
"If these initiatives succeed, we think this could open up new avenues of growth for Intuit beyond its traditional dominance in Tax and Small Business Accounting," Lowe said. "However, these efforts likely hold increased risk as well as Intuit needs to execute, and new products require investment."
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