Intuit, which already owns TurboTax, QuickBooks, and Mint, is about to grow its already sizable portfolio of finance companies.
Intuit announced Monday afternoon that it is set to buy Credit Karma for $7.1 billion.
Credit Karma is a personal finance company that provides its members with products and services to manage their finances and connects those members to financial services providers, credit cards, personal loans, mortgages, automotive financing, and student loan refinancing.
According to details provided by Intuit, Credit Karma currently has more than 100 million members, more than half of which are under 44.
Credit Karma offers its members products that can be used to monitor and improve their credit, prepare and file their income taxes, monitor their identities, and track and manage vehicle information and financing solutions.
As for why it plans to shell out $7.1 billion to acquire Credit Karma, Intuit said that it plans to use the company to “create a personalized financial assistant” that will help consumers better manage their money.
One of the pieces of that plan involves matching consumers with pre-approved offers on mortgages, personal loans, credit cards and more using a combination of consumer financial data that both Credit Karma and Intuit will have access to going forward.
That feature is likely built somewhat on the technology of Approved, the digital mortgage platform that Credit Karma acquired in 2018. At the time, Approved Founder and CEO Andy Taylor said that Approved will help Credit Karma build a “digital mortgage experience” for its members.
“Our mission is to power prosperity around the world with a bold goal of doubling the household savings rate for customers on our platform,” said Sasan Goodarzi, CEO of Intuit.
“We wake up every day trying to help consumers make ends meet,” Goodarzi added. “By joining forces with Credit Karma, we can create a personalized financial assistant that will help consumers find the right financial products, put more money in their pockets and provide insights and advice, enabling them to buy the home they’ve always dreamed about, pay for education and take the vacation they’ve always wanted.”
As the companies note, consumer debt continues to grow, setting records in every quarter. And they view this move as a way to make it easier for people to safely navigate the lending environment.
“This platform will provide consumers with transparent access to their critical personal finance information – including their income, spending, and credit history – to help them better understand their complete financial picture and use it to their advantage, such as for obtaining better interest rates, all with security in mind,” the companies said. “The result will be a complete financial profile that puts the power in consumers’ hands so they can take the steps necessary to improve their financial health and maximize their money.”
The companies state that the new platform will use artificial intelligence and the connections to more than 100 financial partners to “find the right financial products by matching consumers with pre-approved offers on loans and credit cards with competitive interest rates that are right for them,” among other features.
Credit Karma will continue under the leadership of CEO and Founder Kenneth Lin, who will report directly to Goodarzi, the companies said.
Credit Karma will also continue to operate under its existing brand.
“There’s a lot of innovation and investment in FinTech, but we don’t see anyone, with our collective capabilities, pursuing a personalized financial assistant to help consumers take control of their financial lives,” Goodarzi said. “Together with Ken and the Credit Karma team, we’re going to bring together consumers and financial institutions in innovative ways that lower costs for all those involved and level the playing field for consumers regardless of their economic status. We believe we can transform the personal finance industry and power the economy.”
According to the companies, the purchase price for Credit Karma will be payable in equal portions of cash and Intuit common stock.
The total consideration of $7.1 billion also includes an estimated $1 billion of equity awards. Following the close of the transaction, Intuit will issue approximately $300 million of restricted stock units to Credit Karma employees.
The sale price is nearly double what the company was valued at in 2018 when Silver Lake invested $500 million in the company.
The companies expect the deal to close in the second half of 2020.
“We could not have picked a better partner than Sasan and the Intuit team to accelerate our mission to champion financial progress for our members,” Lin said. “Together, the complementary strengths of our combined companies will help us to invest in innovation, build faster and deliver products our consumers expect and deserve.”