00:00.000 --> 00:02.700
Johny Fernandez: So Sean, there
has been some news regarding

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Intuit. I know their financials
just came out. Yeah. For the

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first quarter, and they had some
interesting numbers. So let's

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talk a little bit about that.

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Sean Murray: Sure. So Intuit,
the reason that they are

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newsworthy is that they are,
believe it or not in the small

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business lending industry.

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Johny Fernandez: Yeah. Well, I
did read, you know, that they

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actually they've been working
with. I mean, they're known for

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QuickBooks.

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Sean Murray: Yes, that's right.

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Johny Fernandez: But they've
also kind of jumped into the

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space.

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Sean Murray: Yeah. Yeah, that's
true. So, so Intuit, they do a

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lot of different things. They
own Credit Karma. Now, the

00:35.440 --> 00:38.890
acquisition ended late last
year. And they also own

00:38.890 --> 00:41.650
QuickBooks. And they have a
brand through that called

00:41.650 --> 00:44.470
QuickBooks Capital, which they
originate. From what I

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understand are term business
loans. And one of the, the great

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part, great parts about them
being a publicly traded company

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is that their financials and you
know their statistics are

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publicly available. And
everyone's very interested to

00:59.260 --> 01:02.380
check and find out how everyone
is stacking up against everybody

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else. So these are things that I
love to go and look at. And so

01:06.550 --> 01:11.800
we went into Intuit's recent
quarterly financials. Yep. And

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one thing that's important to
note about Intuit is that they

01:15.010 --> 01:20.110
file their information on a
fiscal year basis. So they just

01:20.110 --> 01:24.460
finished their 2021 fiscal year.
So for most people, the end of

01:24.460 --> 01:29.140
the year is December 31. But
Intuit finished, there's I think

01:29.140 --> 01:31.300
it was July 31. I think.

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Johny Fernandez: Yeah, it was
July 31st. And if we want to go

01:34.120 --> 01:36.370
through some of the numbers, I
mean, it sounds like. Sure. They

01:36.370 --> 01:40.720
originated, $232 million
dollars.

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Sean Murray: Yeah. 200, 232
million? That's correct. Yeah.

01:45.040 --> 01:51.040
$232 million dollars in that was
for the entire 12, a 12 month

01:51.040 --> 01:53.470
period. So that wasn't a
quarterly figure that was an

01:53.470 --> 01:56.950
entire 12 month period $232
million. We can presume that was

01:56.950 --> 01:59.110
through their arm QuickBooks
capital, even though it didn't

01:59.110 --> 02:02.290
specifically say this without
Intuit's books. And the

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significance of that number is
that that would technically put

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them among the largest players
in the small business finance

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industry. They're definitely not
the largest, but they're not

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nobody. Yeah. And I think what's
powerful about Intuit and

02:17.110 --> 02:20.080
QuickBooks is that a lot of the
small business owners use

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QuickBooks as their go to
software to handle their, their

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accounting and bookkeeping.
Right. And a lot of folks use

02:27.700 --> 02:32.020
Credit Karma to, you know,
assess their credit. And so it's

02:32.020 --> 02:35.860
a very, these are very powerful
tools that they have as a

02:35.860 --> 02:38.740
lending company, in order to,
you know, to build up their

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lending business. I will say,
though, that, from what I could

02:42.340 --> 02:47.170
tell Intuit's small business
lending volume is down. Yeah.

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From the previous year and down
even more from 2019.

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Johny Fernandez: Yeah, and want
to compare numbers. I know, in

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2020, they made about 243
million for that fiscal year,

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and we compared to 2019. It did
three 316, millions of million

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from 2019. So they they're
definitely down, you know, a

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decent amount from the last two
years.

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Sean Murray: Yeah. You know, I
will tell you this, and I didn't

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speak to anyone at the company.
So I'm just drawing straight

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from their financials, I could
tell that they were not

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highlighting the small business
lending unit of their company.

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It was in there, because I think
it has to be in there, you have

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to disclose, you know, what type
of numbers they're putting up.

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But I could tell that they were
not highlighting it. I don't

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think it came up during the
earnings call at all. And I

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think that Intuit's long term
goal isn't to be isn't to have

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lending be a driver of their
company. I think it's probably

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more of a value add? Yeah. Well,
it's for some other tech, like

03:46.561 --> 03:49.663
companies are using lending
almost as a driver of growth,

03:49.717 --> 03:53.091
Intuit doesn't need to do that.
I mean, QuickBooks is a pretty

03:53.146 --> 03:56.465
powerful product Credit Karma is
great. And then Credit Karma

03:56.520 --> 03:59.948
generated significant revenue in
Q2, if I'm not mistaken. Yeah.

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$405 million alone, just from
Credit Karma. So I don't think

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that they need to be a lending
company. But they're definitely

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a a company to keep an eye on.
Because that's significant

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volume that should not be
ignored. And they have an entry

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point with small businesses and
merchants that others do not

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have. It's very easy to trust a
button in your QuickBooks

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software, because you use
QuickBooks for your accounting.

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That's a huge edge.

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Johny Fernandez: And let's
definitely, kind of piggyback

04:27.710 --> 04:31.310
off that and jump into another
big story that we have we know

04:31.310 --> 04:34.640
that prosper market also, we
really sell we they released

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some of their financials. And
let's talk a little bit about

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that. We know that they're not
publicly traded, but they do

04:41.450 --> 04:44.060
have to file their quarterly
reports.

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Sean Murray: That's true. I like
companies that are not publicly

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traded that still have to file.
Yeah. Because it not everyone is

04:51.440 --> 04:53.690
looking for that type of
information. Yeah. For a

04:53.690 --> 04:55.820
publicly traded company. There
are a number of analysts who are

04:55.820 --> 04:59.150
closely watching that stock, and
they know everything about what

04:59.150 --> 05:01.100
the company did, and they are
financials than in their

05:01.100 --> 05:03.980
performance before somebody like
we can jump in and find out.

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Yeah. So I really liked that we
have the opportunity to do that

05:08.090 --> 05:11.390
with Prosper because they are
one of the long standing peer to

05:11.390 --> 05:15.500
peer lenders. In fact, you could
argue that Prosper still is a

05:15.500 --> 05:18.380
peer to peer lender, even though
I've often said that peer to

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peer lending is essentially
dead. Yeah. It's been replaced

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by lending platforms that where
all the money that essentially

05:24.950 --> 05:28.490
coming from banks. And the idea
of peer to peer lending has just

05:28.490 --> 05:32.000
been phased, phased out Lending
Club doesn't do it anymore.

05:32.030 --> 05:35.300
Yeah. They acquired Radius Bank,
they don't need peers anymore.

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It's not part of their model.
But Prosper still had a pure

05:38.420 --> 05:42.320
element to their business, even
though it's not the main segment

05:42.380 --> 05:43.430
of their business.

05:43.500 --> 05:45.450
Johny Fernandez: Yeah, so let's
talk about numbers. I know,

05:45.780 --> 05:50.370
their latest financials said
that they made about 450 million

05:50.730 --> 05:53.160
worth of loans in the second
quarter.

05:53.340 --> 05:55.786
Sean Murray: Yeah, you know,
Prosper only does consumer

05:55.844 --> 05:59.280
loans, they don't do business
loans. But I think Prosper is

05:59.339 --> 06:02.950
not talked about enough in terms
of their impact on the online

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lending market, the consumer
lending market. I think some

06:06.386 --> 06:09.997
people kind of counted them out
a few years ago. Yeah. They've

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hung around. And I think if you
look at the financials, you'll

06:13.725 --> 06:17.336
see that the company financially
is operating relatively, on a

06:17.394 --> 06:20.889
relatively healthy basis. They
did have a small net loss for

06:20.947 --> 06:24.442
the quarter. But it wasn't, it
wasn't like an incredible net

06:24.500 --> 06:27.529
loss. And in fact, if you
compare it to the previous

06:27.587 --> 06:31.024
quarter, they had a huge loss in
Q1, but that that loss was

06:31.082 --> 06:34.285
completely attributed to
something that's listed as the

06:34.344 --> 06:37.314
change in fair value of
convertible preferred stock

06:37.372 --> 06:40.925
warrants, right? So this wasn't
like, you know, marketing was

06:40.983 --> 06:44.187
too high, or all the loans went
bad, it was more like a

06:44.245 --> 06:47.798
technical evaluation change, of
something that caused a write

06:47.856 --> 06:51.526
down in that particular quarter
that erased all the profit that

06:51.584 --> 06:54.962
they had for the quarter. I
think if you look at Q1 and Q2

06:55.020 --> 06:58.340
combined, and you understand
what happened in Q1, you see

06:58.398 --> 07:01.660
that prosper overall, is
actually doing pretty good. And

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I think that they are probably a
company that people should keep

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an eye on. Yeah. In the online
lending space. I don't know that

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they're that they're going to be
continuing to grow the peer

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element of their business. Yeah.
You know, something tells me

07:16.396 --> 07:19.774
that they will eventually go
down the same road as Lending

07:19.832 --> 07:23.269
Club, you know, trying to buy a
bank, whatever. They're the

07:23.327 --> 07:26.297
loans that they make are
actually made by Web Bank.

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They're not made by Prosper.
Prosper facilitates them.

07:29.559 --> 07:33.287
They're the technology servicing
component right and so Web Bank

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an actual bank is the one making
the loans and I can just see a

07:37.073 --> 07:40.684
future my personal opinion that
Prosper ends up going down the

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same road of Lending Club.
They're a company to keep an eye

07:44.237 --> 07:46.800
on definitely don't count out
Prosper. Yeah.