gut instinct (NASDAQ: INTU) It just added another growth catalyst to its arsenal with the acquisition of email marketing company Mailchimp. In this section of backstage pass, registered in December 17, 2021Fool shareholders Toby Bordlon, Jason Hall, Lou Whiteman, Travis Hume and Rachel Warren discussed what investors should know about this latest acquisition and what it means for the future of Intuit.
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Toby Bordlon: Intuit, we know what an intuit is or we think we know what an intuit is. Intuit is TurboTax, Intuit is QuickBooks, historically, that’s what they’ve been. They actually struck another deal earlier this year, Credit Karma, which they acquired that’s more of a consumer financial services, personal finance app.
Credit Karma was more on the consumer side, then they took Mailchimp, and that’s more on the small business side. Credit Karma does well with their TurboTax customer base, and Mailchimp works well with their QuickBooks customer base.
Mailchimp does an email marketing platform, they have a focus on small businesses, they will help you build a website, they will do marketing, business, data analytics, all that kind of stuff. You can see how they hope to take Mailchimp and pair it up with QuickBooks small business clients. You can look at this, this one from their Investor Day presentation, they have five growth acceleration bets.
This Mailchimp acquisition hits four and five, is a hub for small business growth, and disrupts the small business offering market. Just like the acquisition of Credit Karma really hit three and to some extent two.
Two and three are your consumer side, four and five are your small business side, and they’ve made some acquisitions to hit them, two big acquisitions. They are changing their business.
The reason I’m putting this acquisition here is, one, I think it’s good, but the second reason, it transforms Intuit from more, we only do TurboTax and QuickBooks, we’re now a full-service company for both consumers and small businesses. This is where they’re headed, where they’re headed towards.
When you put this Mailchimp app alongside Credit Karma, you can see how they build it. This is not the same company it was 20 years ago. If you have in your head, “Oh, Intuit TurboTax, that’s what they do,” take another look, especially with these acquisitions, so transformative.
$12 billion deal price for Mailchimp. They took out the $4.7 billion they borrowed to help close this deal. It hasn’t closed yet, and they’re targeting early next year. But keep an eye on it.
Jason Hall: Every US small business marketing professional knows all about Mailchimp. This is too big
Lou Whiteman: May I say, in full disclosure here, as a consumer, I hate these two companies. [laughs] This is the company solely responsible for making tax law more complicated for millions of Americans, unable to file their taxes for free, and merging with a company responsible for destroying my email.
If I go to the Mailchimp website, the first frequently asked question is why do all my emails end up in spam? This is their first question in the FAQ. You get the logic here, Toby, I think it would probably work, but $12 billion, more than 12 times sales for a very mature company.
The thing that makes me upset about this is that we know the technology is all overpriced, so you’re using your inflated currency to buy inflated multiples. They spent half of that cash. Like I said, they borrowed $5 billion, $6 billion of this deal is cash. If this is stock–
lounge: Lo, the money supply has increased 30% over the past few years, so it’s the same thing, isn’t it?
White man: Well, that’s right, we inflated money and credit. I don’t doubt that this works with them, but it’s just nonsense and the goodwill will be crossed out here. There is no way to get $12 billion.
Travis Home: My question about this if I was the owner of Mailchimp, wasn’t it like two people who own the entire company?
lounge: private job.
White man: They say we’ll take cash, thank you.
Howe: Their employees didn’t have anything and they financed it themselves too. If you’re in the field, you know what the trends are for your business better than anyone else. I’m getting more emails than ever and haven’t subscribed to any of these things. [laughs]
White man: Thank you Mailchimp.
Rachel Warren: Uh that’s why.
Howe: It’s Mailchimp, so if you’re one of them, you see the top and you’re like, ripcord I’m out here.
lounge: I’ll tell you to think of it this way, you are able to build a company of this size without relying on outside investors that you can sell for $12 billion. Do you know this tells me? Incredible economics in this business, that’s what he tells me.
White man: Just wait until they figure out how to integrate Slack so we can get those Mailchimp messages in Slack instead of in email.
lounge: Obviously this will happen.
Bordeaux: surprising. We’ll see how it works. I’m an optimist, but they have some work to do. This, if, is one of my concerns about this, and this is something I will watch.
Jason Hall has no position in any of the stocks mentioned. Lou Whiteman has no position in any of the stocks mentioned. Rachel Warren has no position in any of the mentioned stocks. Toby Bordlon has no position in any of the listed stocks. Travis Hoium does not hold a position in any of the listed stocks. Motley Fool owns and recommends Intuit. Motley Fool has a disclosure policy.
The opinions and opinions expressed here are those of the author and do not necessarily reflect the views and opinions of Nasdaq, Inc.