Johny Fernandez: So Sean, there has been some news regarding
Intuit. I know their financials just came out. Yeah. For the
first quarter, and they had some interesting numbers. So let's
talk a little bit about that.
Sean Murray: Sure. So Intuit, the reason that they are
newsworthy is that they are, believe it or not in the small
business lending industry.
Johny Fernandez: Yeah. Well, I did read, you know, that they
actually they've been working with. I mean, they're known for
QuickBooks.
Sean Murray: Yes, that's right.
Johny Fernandez: But they've also kind of jumped into the
space.
Sean Murray: Yeah. Yeah, that's true. So, so Intuit, they do a
lot of different things. They own Credit Karma. Now, the
acquisition ended late last year. And they also own
QuickBooks. And they have a brand through that called
QuickBooks Capital, which they originate. From what I
understand are term business loans. And one of the, the great
part, great parts about them being a publicly traded company
is that their financials and you know their statistics are
publicly available. And everyone's very interested to
check and find out how everyone is stacking up against everybody
else. So these are things that I love to go and look at. And so
we went into Intuit's recent quarterly financials. Yep. And
one thing that's important to note about Intuit is that they
file their information on a fiscal year basis. So they just
finished their 2021 fiscal year. So for most people, the end of
the year is December 31. But Intuit finished, there's I think
it was July 31. I think.
Johny Fernandez: Yeah, it was July 31st. And if we want to go
through some of the numbers, I mean, it sounds like. Sure. They
originated, $232 million dollars.
Sean Murray: Yeah. 200, 232 million? That's correct. Yeah.
$232 million dollars in that was for the entire 12, a 12 month
period. So that wasn't a quarterly figure that was an
entire 12 month period $232 million. We can presume that was
through their arm QuickBooks capital, even though it didn't
specifically say this without Intuit's books. And the
significance of that number is that that would technically put
them among the largest players in the small business finance
industry. They're definitely not the largest, but they're not
nobody. Yeah. And I think what's powerful about Intuit and
QuickBooks is that a lot of the small business owners use
QuickBooks as their go to software to handle their, their
accounting and bookkeeping. Right. And a lot of folks use
Credit Karma to, you know, assess their credit. And so it's
a very, these are very powerful tools that they have as a
lending company, in order to, you know, to build up their
lending business. I will say, though, that, from what I could
tell Intuit's small business lending volume is down. Yeah.
From the previous year and down even more from 2019.
Johny Fernandez: Yeah, and want to compare numbers. I know, in
2020, they made about 243 million for that fiscal year,
and we compared to 2019. It did three 316, millions of million
from 2019. So they they're definitely down, you know, a
decent amount from the last two years.
Sean Murray: Yeah. You know, I will tell you this, and I didn't
speak to anyone at the company. So I'm just drawing straight
from their financials, I could tell that they were not
highlighting the small business lending unit of their company.
It was in there, because I think it has to be in there, you have
to disclose, you know, what type of numbers they're putting up.
But I could tell that they were not highlighting it. I don't
think it came up during the earnings call at all. And I
think that Intuit's long term goal isn't to be isn't to have
lending be a driver of their company. I think it's probably
more of a value add? Yeah. Well, it's for some other tech, like
companies are using lending almost as a driver of growth,
Intuit doesn't need to do that. I mean, QuickBooks is a pretty
powerful product Credit Karma is great. And then Credit Karma
generated significant revenue in Q2, if I'm not mistaken. Yeah.
$405 million alone, just from Credit Karma. So I don't think
that they need to be a lending company. But they're definitely
a a company to keep an eye on. Because that's significant
volume that should not be ignored. And they have an entry
point with small businesses and merchants that others do not
have. It's very easy to trust a button in your QuickBooks
software, because you use QuickBooks for your accounting.
That's a huge edge.
Johny Fernandez: And let's definitely, kind of piggyback
off that and jump into another big story that we have we know
that prosper market also, we really sell we they released
some of their financials. And let's talk a little bit about
that. We know that they're not publicly traded, but they do
have to file their quarterly reports.
Sean Murray: That's true. I like companies that are not publicly
traded that still have to file. Yeah. Because it not everyone is
looking for that type of information. Yeah. For a
publicly traded company. There are a number of analysts who are
closely watching that stock, and they know everything about what
the company did, and they are financials than in their
performance before somebody like we can jump in and find out.
Yeah. So I really liked that we have the opportunity to do that
with Prosper because they are one of the long standing peer to
peer lenders. In fact, you could argue that Prosper still is a
peer to peer lender, even though I've often said that peer to
peer lending is essentially dead. Yeah. It's been replaced
by lending platforms that where all the money that essentially
coming from banks. And the idea of peer to peer lending has just
been phased, phased out Lending Club doesn't do it anymore.
Yeah. They acquired Radius Bank, they don't need peers anymore.
It's not part of their model. But Prosper still had a pure
element to their business, even though it's not the main segment
of their business.
Johny Fernandez: Yeah, so let's talk about numbers. I know,
their latest financials said that they made about 450 million
worth of loans in the second quarter.
Sean Murray: Yeah, you know, Prosper only does consumer
loans, they don't do business loans. But I think Prosper is
not talked about enough in terms of their impact on the online
lending market, the consumer lending market. I think some
people kind of counted them out a few years ago. Yeah. They've
hung around. And I think if you look at the financials, you'll
see that the company financially is operating relatively, on a
relatively healthy basis. They did have a small net loss for
the quarter. But it wasn't, it wasn't like an incredible net
loss. And in fact, if you compare it to the previous
quarter, they had a huge loss in Q1, but that that loss was
completely attributed to something that's listed as the
change in fair value of convertible preferred stock
warrants, right? So this wasn't like, you know, marketing was
too high, or all the loans went bad, it was more like a
technical evaluation change, of something that caused a write
down in that particular quarter that erased all the profit that
they had for the quarter. I think if you look at Q1 and Q2
combined, and you understand what happened in Q1, you see
that prosper overall, is actually doing pretty good. And
I think that they are probably a company that people should keep
an eye on. Yeah. In the online lending space. I don't know that
they're that they're going to be continuing to grow the peer
element of their business. Yeah. You know, something tells me
that they will eventually go down the same road as Lending
Club, you know, trying to buy a bank, whatever. They're the
loans that they make are actually made by Web Bank.
They're not made by Prosper. Prosper facilitates them.
They're the technology servicing component right and so Web Bank
an actual bank is the one making the loans and I can just see a
future my personal opinion that Prosper ends up going down the
same road of Lending Club. They're a company to keep an eye
on definitely don't count out Prosper. Yeah.