Good afternoon. My name is Latif and I will be your conference facilitator. At this time, I would like to welcome everyone to Intuit’s Third Quarter Fiscal Year 2020 Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer period. [Operator Instructions]. With that, I will now turn the call over to Kim Watkins, Intuit’s Vice President of Investor Relations. Ms. Watkins?

Thanks, Latif. Good afternoon and welcome to Intuit’s third quarter fiscal 2020 conference call. I am here with Intuit’s CEO, Sasan Goodarzi; and Michelle Clatterbuck, our CFO. Before we start, I would like to remind everyone that our remarks will include forward-looking statements. There are a number of factors that could cause Intuit’s results to differ materially from our expectations. You can learn more about these risks in the press release we issued earlier this afternoon, our Form 10-K for fiscal 2019 and our other SEC filings. All of these documents are available on the Investor Relations page of Intuit’s website at intuit.com. We assume no obligation to update any forward-looking statement. Some of the numbers in these remarks are presented on a non-GAAP basis. We have reconciled the comparable GAAP and non-GAAP numbers in today’s press release. Unless otherwise noted, all growth rates refer to the current period versus the comparable prior year period and the business metrics and associated growth rates refer to worldwide business metrics. A copy of our prepared remarks and supplemental financial information will be available on our website after this call ends. And with that, I will turn the call over to Sasan.

Thanks, Kim, and thanks to all of you for joining us today. I'm going to cover four topics on today's call to help you understand our performance in the quarter, and our outlook longer term in context of the global COVID-19 pandemic. I'll start by sharing how we've responded to the pandemic with our employees, customers, share our results for the quarter and highlight recent trends in our business. Then I'll put these results in context of our long-term strategy and finish by talking about our playbook for leading in a downturn to accelerate our performance. Let's start with our response to the pandemic where unprecedented uncertainty, along with widespread shelter-in-place initiatives have changed our daily lives. At the onset of the pandemic, we created an enterprise crisis team to drive four work streams. First, keeping our employees safe and healthy. This has been and will continue to be our number one priority. Second, ensuring that we run the business effectively and continue to deliver for our customers. Third, keeping our workforce engaged and productive. And fourth, supporting our customers, our partners, and the communities where we live and operate. I'm proud of how our employees adapted to this sudden change and how seamlessly we transitioned our 10,000 person workforce around the world to a work-from-home environment. I'm even more proud of how in the face of uncertainty, our employees’ commitment to customers has grown even stronger. The challenges facing consumers and small businesses during this difficult time have inspired our teams to innovate with speed and apply platform capabilities to help to solve several problems caused by this pandemic. As a result, let me share three examples of how we're helping consumers and small businesses get access to aid and relief. First, in less than a week following the…

Thanks, Sasan. Good afternoon, everyone. I'll start by adding my thoughts on the playbook we're using to run the business during these challenging economic times and then provide an overview of our financial results this quarter. As Sasan shared, we've been through tough economic times before and have developed a playbook of principles for operating in a downturn. These principles are designed to accelerate our execution in the future and help both our customers and Intuit emerge from a downturn in a stronger position than when it began. One of those principles is focusing on controlling what we can, including discretionary spending to deliver bottom-line results, roughly three quarters of Intuit’s expense base is variable over time. We're scrutinizing all expenses and carefully managing what we can control in this environment, such as travel, marketing spend, and hiring decisions. Let me now turn to our results. As Sasan mentioned, we saw a continuation of the strong momentum we built through the second quarter, during the first half of the third quarter, followed by a slowdown in our business beginning in mid-March. For the third quarter of fiscal 2020 we delivered revenue of $3 billion, down 8% year-over-year; GAAP operating income of $1.4 billion, a 21% decrease; non-GAAP operating income of $1.5 billion an 18% decrease; GAAP diluted earnings per share of $4.11, a 21% decrease; and non-GAAP diluted earnings per share of $4.49, a 19% decrease. Turning to the business segments, Consumer Group revenue was $1.8 billion down 15% in the third quarter. This decline reflects the delay of the IRS tax filing deadline to July 15th which is shifting revenue out of the third quarter and into the fourth quarter. We're pleased with what we've seen season to-date and do-it-yourself category continues to grow faster than assisted and we…

Great. Thanks, Michelle. We are uniquely positioned to make a positive impact on the world during this time. I'm proud of the actions that we've taken as a company to support our customers when they need us most. We've acted with speed, enabled our employees to be safe and productive working from home and continuing to innovate for our customers. We're using our capabilities to rapidly deploy solutions to help consumers and small businesses access the products and relief that they need during this fiscal time. I'm confident we will emerge an even stronger company. So, with that, let me turn it over to you Latif.

Thank you. [Operator instructions]. Our first question comes from the line of Kirk Materne of Evercore ISI. Your line is open.

Sasan maybe just to start with you. When you think about sort of this environment and what you all have to do to sort of help your client base out, is there anything you've done differently I guess in terms of either invoicing duration or obviously discounting? I guess, just how do you think about sort of, in balance, really the short-term versus the long-term? Obviously, you mentioned that the shift towards virtual is clearly going to happen faster and I think nobody would argue with you about that. But can you just talk about sort of how you're talking or thinking about your I guess pricing when it gets down to it and invoicing with your clients in this very difficult environment for a lot of them?

Let me take it in maybe two ways. One, maybe mid longer term and then the other is the here and now. First of all, we have a playbook for times like this and our playbook is really about focusing on customers, focusing on innovation and putting our investment dollars in the areas that matter the most. But then, as you heard from Michelle, being very diligent in terms of our expense, envelope. With that said, as we look at the long-term, we're actually quite excited about the current environment, not the health element of it, but the fact that it will accelerate folks moving to a virtual world, folks moving to having more online presence and commerce capabilities and then money has always been important. But we believe more than ever, ways to save money and get out of debt is going to be more important than ever before and our big bets are squarely focused on the things that matter the most. And we happen by the way to be going through our one and two year planning process, which literally was happening in parallel of when the pandemic started. And it was at that time where we actually used the opportunity not only to be clear about a conservative investment envelope for our next fiscal year, but to really ensure that we can take the dollars that we have allocated and use them as an accelerant for our bets and we just finalized our one and three year plan internally and have allocated our dollars to the big bets and the ones that matter most, and in fact, again, using it as an opportunity to accelerate. So, we actually feel good about the things that we can control and the things that we need to do for…

And if I can ask just a really quick follow-up. I assume given what's going on has really no impact on serve your initial thought process around sort of the integration plan for Credit Karma. Is that correct?

It does not. We're actually more excited about what we can do with Credit Karma to accelerate helping customers, save money and reduce debt. So, it has not changed our plans.

Thank you. Our next question comes from Keith Weiss of Morgan Stanley. Your question please.

Hi. Mark Randy on for Keith Weiss here. Thanks for taking my questions. So, I want to dig in a little bit to the TurboTax side. So, obviously a big shift in revenues related to the filing extension. But have you guys seen any change in the mix of free files? Was that any reason for the kind of push of revenues? Any detail on the free filing that would be helpful.

So, Mark, thanks for your question. First of all, I'll just remind us that, when you look at the categories that we serve, the DIY category is about $3 billion in TAM. The assisted category is about $20 billion in TAM. And then the consumer finance space, which we're going to be able to accelerate serving with Credit Karma is about $57 billion in TAM. In that context, very specifically to your question, this is actually the part of the season that is our strength. Really the revenue that shifted into the fourth quarter is because of the fact that the IRS deadline shifted, and these are actually the more high value customers, the more complex customers and the ones that have balance due, and it's actually are our strength. This part of the season is our strength, because it's our customers with the highest retention over the years. And so, given where we are with the category growth and given that we're the champions of do-it-yourself category with the category growth and what we see with share and ARPC, we feel good about where we are and we're excited about playing our game in the last two months of the season which is our strength. And we've really not seen anything outside of what we would expected from an FSA perspective. So, really the revenue shift is entirely because of the shift in the deadline.

Excellent. Really helpful. If I could sneak in one quick follow up. So, there's obviously been a big uptake in share gains this season in DIY. How do you expect that? Do you expect it to normalize until the back half of the season as like shelter-in-place kind of restrictions come off and ease and people can go to a tax professional or a CPA or you see this being relatively durable throughout the rest of the season?

Yes, I'll make two comments. One is, I think this pandemic will drive structural and behavior changes across many industries, whether it's education, whether how you get mortgage loans, to how you manage your business, to how you do your taxes. And the great news is we're positioned the well with our digital platform to serve customers with assistance to really take advantage of the opportunity. And there's just simply a tailwind of more and more folks wanting to be able to do their taxes themselves and if they need help to be able to get that assistance in the comfort of their home. We'll have to see how the season plays out. I don't want to second guess whether these current trends will continue or not. But what I would tell you is that the shift to a virtual world probably accelerated by five years across many, many different industries. And I think that will be the same thing that we'll see play out when it comes to doing your taxes and/or helping small businesses manage their books, which is where QuickBooks Live comes into play.

Thank you. Our next question comes from Brent Thill of Jefferies. Your line is open.

Many companies have been giving us a little bit of color into the current month on -- and I'm curious if there's any color about what you're seeing from the perspective of April turning into May, any notable items would be helpful?

So, what I would say is -- Id just touch on the first couple of weeks in May. We have seen a stabilization. To be specific we've seen stabilization in charge volume, the number of payroll companies that are paying their employees. We've seen stabilization and the number of companies that are tracking their time through TSheets. We've been seeing the same thing with acquisition of new customers and we've seen stabilization on the retention front. And on desktop, we've seen a little bit of an uptick because we deliberately slowed down the communication upgrades to our desktop customers, because the timing of doing so was really right in line with when the pandemic hit. And so now that we've started that communication, there's been a little bit of an uptick. I think what’s really important, if I put all of this in a context, is it’s several weeks of trends. And we want to make sure that we don't portray several weeks of trends into a trend, but we have seen a stabilization in the first two weeks, but we clearly want to see the economy come back and ultimately see small businesses open up and see if that trend continues.

Thank you. Our next question comes from Robert Simmons with RBC Capital Markets. Please go ahead.

So, can you talk about how you've adjusted with the amounts and the timing of your advertising spending and the overall -- across the different segments given the tax season is more spread out this year and other factors?

Yes, sure, Robert. Thank you for your question. Let me make two points. One, when this pandemic hit beyond the fact that we were right in the middle of our two and one year of planning and it was a great opportunity for us to agree to a conservative investment envelope as we look ahead to really continue to build our muscle in terms of prioritization and resource allocation. We also then looked at that here and now and what changes we would make. And we did reduce discretionary funds in areas that we were very comfortable with. Of course travel is a given, but hiring and marketing across the board. And specifically in TurboTax both customer success and marketing, we of course needed to kind of lead time, which the team has done. We have a playbook around this and extended between now and July 15th. And so, we've done that. But I would say overall the company's discretionary spend are down because we lowered it for right reasons, but particularly in tax, we just simply extended it through the end of July. We expect, by the way, just sort of kind of black box that we'll need to spend up to $20 million in both customer success and marketing because of the extension of the tax season to ensure that we're there for our customers, but we've also reallocated dollars from other places in the company to make up for it.

And then can you talk to how the economics of the PPP work for Intuit? Just like what kind of cut of the fees you keep and that sort of thing?

Yes, sure. Maybe if I could just ask Michelle to take that.

Absolutely. We haven't talked specifically about the monetization. As Sasan talked about earlier, we did say that we've provided $875 million of PPP Small Business loans, and we're working with an SBA approved bank to fund these loans. We're funding some directly, but it's a small amount and we don't expect to hold those. We will expect to earn about 3% to 4% including servicing on the loans themselves.

Thank you. Our next question comes from Brad Zelnick of Credit Suisse. Your line is open.

Hi, everyone. It's Yao Chu on for Brad Zelnick. Thank you for taking my question, and thanks for what you're doing for small businesses out there. I have a question as it relates to Intuit Capital and potentially Credit Karma. From my understanding, the business models of these segments rely on the algorithms that are basically a combination of historical behavior and real-time data. One of the criticisms of FinTech is that every crisis is driven from the next and that some of these algorithms may be built in data from the last cycle that may not be so relevant in the current one. As we work our way through this, can you share some thoughts on a couple of things. Firstly, how well these businesses and algorithms are working? And does the value proposition remain intact for these data-centric plays? And where the main gaps or differences in behavior where you may have needed to intervene? And I guess based on that, do you think managing through this crisis inherently increases the value of these assets in the longer-term playing through both the downswing and the recovery?

Thank you for the question, Yao, and good to hear your voice, and hope all is well. Let me make a general comment, maybe two general comments and get more specific to your question. I think that first of all, as you know, us and Credit Karma are operating as two separate companies, but what I can tell you from the due diligence that we did, we were very impressed with their machine learning capabilities, their ability to do quality checks to watch for bias, and adjust their models on a daily basis because they use 2,600-plus data points per customer to run their models and so they are always adjusting. But let me, that's in context of the due diligence that we did, and I would just say the second macro point is this is one of the reasons why we believe that this environment is actually an accelerant for us to find ways to help customers put more money in their pockets, save money, and get out of debt because all of the machine learning capabilities that we have and Credit Karma has and that we have that in this current environment, done the right way, actually allows us to adjust our models to better serve customers. Now, let me get more specific I think to your question around QuickBooks Capital. This QuickBooks Capital and the machine learning capabilities and the platform is something that we've been working on for years both cleaning up the data so we can use 26 billion data sources and the 360 information that we have from our customers and with their permission to be able to use to in essence know what loans that they can be able to take on, what capacity, the number of months, and how quickly we can adjust our dial. And one of the things that the team has done that's a wonderful progress is that we do checks for biases. Whether in this environment or in a different environment, we're always checking for biases so we can adjust the model. And the model's built in such a way where we can adjust it on a daily basis so we can learn very, very quickly, and what we see in this environment is that it's actually a great opportunity to accelerate our learning so that we can be much more pinpoint in terms of what we can do for customers and when we can do it for the customers. So I'm proud of our QuickBooks Capital team and what they've been able to actually accomplish, and we're learning and adjusting more daily. And by the way, those capabilities is not just for QuickBooks Capital. We use those same capabilities for Instant Deposit, same-day payments, we use those same capabilities for same-day payroll, and so these capabilities are truly platform capabilities that we can use across the company.

And let me sneak one more quick one in. What are the main constraints in distributing PPP funds faster at this point?

I'm sorry. Could you ask your question one more time?

Yes. I know you've distributed about -- a bunch of PPP funds to-date. Can you talk to the main constraints on the ability to distribute the funds faster to your base?

Yes, first of all, we truly admire what the team in Treasury and SBA has done to make these loans available and all of the checks they've had to do on privacy and security to be able to distribute these loans, so they truly deserve an applause for the work that they've done. To get to your question, we actually have been able to move quite fast and quite rapidly because of the fact that we know our customers' data, whether it's QuickBooks and payroll customers or QuickBooks Desktop payroll customers, or Self-Employed that have actually filed their taxes with us and be able to very quickly help them apply for the loan. Really, the biggest inhibitor has been all of these that are applying for the loan and having to wait in line to be able to get the loans approved by the SBA. And so, really that's where the bottleneck is. And by the way, the SBA is actually moving quite fast. It's just the number of loans that's coming out of loan requests and how they have to process it and ensure that they reduce fraud. That's I think probably the most difficult part. But on our end, we've been able to move very, very rapidly and we don't really have too many obstacles in front of us.

Thank you. Our next question comes from the line of Siti Panigrahi of Mizuho. Your line is open.

Sasan, you talked about one of the bets is in -- like selling in omni-channel world. In fact, we're seeing small businesses they're trying to have their online presence or moving to more of e-commerce environment. So could you give us some color like how Intuit can help and how big is an opportunity for Intuit for helping SMB moving to online?

Yes, thank you for your question. Again, great to hear your voice, and hope you're safe and sound. When you think about Intuit's base, we serve primarily service base businesses, and one of the core drivers behind our bet number four which is being the center of small business growth and one element of it being really providing transformative experiences to make it easy for our customers to do commerce across multiple channels is to actually be able to accelerate serving and penetrating product-based businesses. But it's interesting what this environment is causing, so now let me get to answer your question in two ways. One is even service-based businesses, they're actually if you remember at Investor Day we shared last year that we have 400 million-plus invoices that our customers send out, but about 12% are payment-enabled. We're actually seeing more and more service-based businesses that are actually looking to make all of their payments payment-enabled so they can actually get paid online faster and be able to get out of the paper world. And so this is having, this is going to over time have an impact on service-based businesses to get out of doing manual payroll and doing it online because they've seen with the Paycheck Protection Program if you can't prove your payroll data, you're not really -- you're not going to be able to be first in line to get a loan. And so, it's going to impact more and more service-based businesses going online which is where our sweet spot is. The second element though is the question you asked which is omni-channel, and really the core problem that we want to solve based on well over a year of conversations with our customers is it's actually quite easy for our customers to get…

Yes, thanks for that color. And if I could ask one question on tax. This is unusual tax filing year, now it's shifted to July 15 from April 15, so what percent of the people have usually those file taxes if you exclude the people those who filed for stimulus check, what percentage have now not yet filed and moved to maybe for this quarter, and also, what are the changes you're seeing in terms of TurboTax Live adoption so far?

Sure. Well first of all, I'll start by affirming it is a very unusual season because I don't think we've been in a place where tax season has been extended. But in many ways, it's affording us new opportunities because our team is built for times like this and things like experimenting in ways that we otherwise wouldn't be able to. So our team is doing a wonderful job leveraging the current opportunity. If you think about last year, there was 155 million returns filed and I think there's 110-ish-million that have been filed already, and the actual specific numbers are on the IRS website, but nevertheless, that would tell you that you've got 40 million, 45 million customers that still need to file their taxes between now and July 15. So that kind of gives you a feel for what's left to come. In terms of TurboTax Live, we focused this year on improving first-time use. We're really focused on providing more access to experts because when our customers engage an expert, our conversion and retention goes up and we're really focused on improving the expert side of the platform, meaning that experts would contextually know where the customer is, and how to best serve them and help them very, very quickly. And so far, TurboTax Live is really delivering within the expectations that we have had for it, and we've got two months of the most complex filers that are still left to come, and so we're excited to serve as many customers as we can between now and then through TurboTax Live.

Thank you. Our next question comes from Ken Wong of Guggenheim Securities. Your line is open.

And thanks for all the good color on the first half/second-half splits. Maybe I'll steer this question toward Michelle. So obviously lots of unknowns in kind of going forward, but as we think about your kind of ability to guide or I guess lack thereof, is this more a matter of kind of magnitude in terms if things could get worse, or just an issue of duration in terms of not understanding how long this might play out? Thank you.

Hi, Ken. Thanks for the call -- question. First of all, I would say that as Sasan said, we are starting to see a few trends in the business that are stabilizing and he enumerated those a minute ago. But it just doesn't make sense off of two weeks of data to be able to predict going forward, so that is really the biggest issue there. But I would say don't confuse the lack of guidance with a lack of confidence in our business and our strategy. So in fact, we've never been more confident in our business, our strategy of becoming AI-driven expert platform, and the five big bets that we've declared. But confidence doesn't mean certainty, and we're in a very uncertain environment as we've discussed, and so that's actually why we're not issuing guidance. It's really around the uncertainty.

Thank you. Our next question comes from Daniel Jester of Citi. Please go ahead.

Great. Thanks for taking my question. Another one on QuickBooks Capital, if I can? For the loans that you've made for PPP, how many of those customers were brand new and never really used the QuickBooks Capital loan program before? Maybe you can just kind of -- just in terms of repeat usage there would be interested to see if you're expanding the ability on the back-end of this to get people already in your system to use QuickBooks Capital. And then just are there any learnings either from the regulatory or the go-to-market there that could accelerate QuickBooks Capital on the back-end of this? Thanks.

Yes, sure. Thanks for your question, and Kim and/or Michelle will keep me honest on this. Our goal was to serve as many small businesses as we could, and of course, we started with our existing base and I believe that all of the current customers that we served are all existing QuickBooks customers. So I'll get confirmation if I got that wrong, but it's been primarily all existing customers. And I would tell you to the second part of your question, it's incredible the halo effect that we've gotten by all the things that I mentioned earlier, from very quickly partnering with the IRS to launch the stimulus offerings, to what we've done with the PPP program, to what we've done to fund and partner with Go Fund Me, which is a crowd-sourcing platform to help small businesses get access to money, which I think has been almost close to $40 million that small businesses have gotten access to. Just a number of things that we've done has gotten really a lot of attention for QuickBooks as a brand that can help customers. And I think this current environment and what we have to do very specifically around PPP just really made our machine model, machine learning models stronger which allows us to make our services stronger which allows us to really over time, helps us better serve payments, payroll, and ultimately QuickBooks Capital customers.

Great. Thank you. And then on Turbo and Mint, I think you in your prepared remarks talked a bit about engagement. I'm just wondering if you can provide a little bit more color there. Does engagement mean clicks, or does it mean actually going through and purchasing a credit card or a loan through your partner? I'm just wondering if you could give some more color there. Thanks very much.

Sure, yes, absolutely. So what we have seen, more demand, less supply. And so on the demand side means that customers are really interested in their credit score, they're really interested setting goals for their credit score, and learning from us how to improve their credit score by potentially making payments on time or checking on the status of their refund, and of course, more interested in them getting access to whether it's personal loans, credit cards, those sorts of things. What we've seen an impact on is on the supply side, because in this kind of an environment, although the digital platform is the highest return for financial institutions, we've seen some financial institutions pull back temporarily off of the Turbo and Mint platform. But it's also the first place qualitatively that they told us they want to come back to. They're just waiting for the current environment specifically unemployment to stabilize so that they can then come back on to the platform. So higher demand, less supply from a financial institution side, which means less monetization.

Thank you. Our next question comes from Scott Schneeberger of Oppenheimer. Your line is open.

Thanks very much. Good afternoon, Sasan and Michelle. Thanks a lot. My first question is during fiscal 2009, the Global Financial Crisis, Small Business was relatively flattish. I think the revenue was down only 1%, and Sasan, I'd love to hear your thoughts, just high-level conceptually about just compare and contrast about that time versus this time, what we're seeing and what could be good case/bad case. Thanks.

Sure, sure. Well, what I would start with and to build on your point, in '08-'09 time frame, what you in essence saw was in essence, the total number of small businesses that went out of business it upticked a couple of points. The number of businesses that started downticked a couple of points. So there was kind of a 3, 4 point impact on the total number of small businesses. And the second thing I would say is things are in some ways very different than '08 and '09 on two dimensions. One is, '08 and '09 was actually a recession caused by the health of financial institutions. This is a pandemic that's health-driven where in essence, small businesses have been completely shut down. The economy was actually quite healthy, but now it's not because of the shutdown of small businesses, which has also caused a recession. So in some ways, they're very different, but in many ways, the impact that we're seeing is the same, which is customer acquisition as I mentioned earlier has slowed down, retention has down-ticked a few points, charge volume has down-ticked from being up 30 to now it's been flat post-mid-March COVID impact. And so that's the impact of course that we're seeing now, but our business is also very different. We have larger portion of our Small Business is subscription-based and it's in the cloud whereas back then, it was primarily Desktop which sees a sharper decline but also a sharper rebound. So with all of that said, those are the two or three things that from a from/to perspective are different. I would reiterate what I mentioned earlier. We are not trying to second-guess the market or meaning how fast things will rebound or how long this is going to, this impact will stay in place. So we're very focused on our controllables, which is accelerating our focus on our big bets, helping our customers in times like this just to ensure we're positioned to come out of this much, much stronger than when we even went into it.

Thanks. I appreciate that. And as a follow-up, over on the tax side, just curious what insight you have from the IRS thus far with regard to the stimulus filings? And I believe in your April 13 press release, you said you thought that would be for more than 10 million Americans, but not a very clear number. Do you have an idea what type of impact that number will be on the IRS volume results this year for tax filing? Thanks.

Sure. We of course as I mentioned earlier, the numbers -- the stimulus numbers are actually in the current filings and we believe at some point the IRS will hopefully separate them so there's visibility for our investment community, what the actual tax returns are versus stimulus returns. 80% of folks have actually been eligible for the stimulus money. The point that we tried to be clear about earlier is that there are 10 million people that don't typically have to file their taxes that are also eligible, and so they have to go through the stimulus offering to be able to get access to the funds. And we believe at some point by then the tax season, the IRS will in essence flesh that out and communicate what the actual tax returns are versus stimulus filings. What you should be left with is it doesn't change the perspective that we shared about the business. The do-it-yourself category is growing. We're seeing a larger and faster shift to the category. We feel good about where we are relative to our online share and ARPC, and this is the part of the season that's our strength and we're looking forward to finishing the next couple of months out.

Thank you. Our next question comes from Brad Reback of Stifel. Your line is open.

Great. Thanks very much. Michelle, you had mentioned earlier about three-quarters of the expense base is variable and it's taking some actions and been forced into some actions around travel and marketing and hiring. Can you give us a sense on what amount you're saving right now with those things?

Hi, Brad. Thanks for the question. What I would start with is I would say that we have principles around leading through a downturn and they have been proven out. One of the principles in our playbook, as I mentioned, is really around controlling what we can, discretionary spend, so that we can deliver our bottom-line results. We're looking at all of our expenses. Some of those that are easiest to control though are the travel, some marketing spend and the hiring decisions. I'm personally, along with everyone on Sasan's staff making sure that we're really thinking about what we can do in the short-term. But we're also taking a look at things that may have a longer-term impact, things like our real estate decisions and working remotely. As Sasan also mentioned a little bit ago, we will have some increases in expenses. That's for the tax season, the extended season, about $20 million that's marketing and customer success, but we have been able to offset some of that with the discretionary spend. We haven't given a specific number, but we feel very good about the actions that we've been taking in order to get our spend in-line and set ourselves up for next year.

Thank you. Our next question comes from Josh Beck of KeyBanc. Please go ahead.

Thanks for the question, and congrats on all the great work you've done for your customers. Probably a higher level question for Sasan. You talked about this idea of virtual acceleration and just given your purview and that you see how businesses and consumers are behaving, I'm just wondering if there's any areas where it seems like it could be notably strong on potentially the other side of this pandemic. So any color you can give there would be great.

Sure, sure. I'll start with what I think all of you see and then I'll make a specific to us, but as I talked a lot of my peers across many different industries whether it's CEOs of companies or investors in many, many companies across many industries, whether it's from how you used to get your workouts in and training, if you went to a trainer and how that is shifting to a virtual world, Peloton being one example of that where it's accelerating to an education world where now you have to figure out how to get your education online to more and more people now shifting to be able to engage for medical help online, so getting your taxes done, to being able to manage your business and bookkeeping, and so we believe that this pandemic will have a structural and behavioral impact in several areas. One is just you're going to first think about how to potentially engage in a virtual world, not in a physical world. It doesn't mean we won't go back to a physical world, but I think this will have a fundamental behavioral impact over time. Two is to ensure that you're doing most of your stuff online whether it's how you do payments, whether it's how you do payroll, whether it's how you conduct commerce, even if you're a service business, moving some of your things to now be able to conduct it online is going to be important. And then more important than ever, how do you ensure that you can save money and reduce debt? So we believe that structurally and behaviorally, those three areas are going to accelerate, and it's anybody's guess by how much. But literally, if you think about it overnight, these areas have shifted and I just think we've progressed five years in this area of moving to a virtual world the area of more being online, and the importance of money, and that's one of the things that excites our leadership team and the whole company around what is possible for us to accelerate to ensure that we can deliver for our customers given these shifts that we're seeing.

Thank you. Our next question comes from Matt Pfau of William Blair. Your line is open.

Thanks for fitting me in. Just wanted to ask on the QuickBooks business if you're seeing any difference in terms of behavior between U.S. customers or international customers and then Self-Employed relative to Small Businesses?

Yes, thanks, Matt. Although our trends were all at the Small Business level, what I would just tell you is we've seen U.S. be a bit more resilient than countries outside of the U.S. and all those metrics that we shared. And then the second thing is on the Self-Employed side, what's interesting is although the macro numbers that we shared which is acquisition being down 15 points before and after, or after COVID, with some of the discounting that we are doing, we're actually seeing interest probably more than before on the Self-Employed side. That of course in no way covers the impact that we're seeing on acquisition, but we're actually seeing what we're looking to learn is are these new Self-Employed businesses being born and they're using our Self-Employed app, or maybe we're doing the analysis and looking at our data. But the bumper sticker is I would say U.S. is more resilient than countries outside the U.S., and we're seeing interesting acquisition trends on SE early days, we need to analyze it to understand where they're coming from. It doesn't change the bigger picture of what we shared, which is post-mid-March we were down 15 points and we've seen that stabilize, but SE is a little bit of a green shoot that we're looking to learn more about.

Thank you. At this time, our final question for the session comes from the line of Kash Rangan of Bank of America. Your line is open.

I have a couple of quick questions, and thanks for the extended time that you've spent on the conference call. Really appreciate it. One is, Sasan, what are the indicators you're looking for that Small Business activity could be starting to not just stabilize but starting to pick up some fundamental ground indicators that since you've been in the business such a long time, I'm sure that there are some things you're keenly watching for. I'm just curious what they are. And also, if you could share your thoughts, Michelle or Sasan, how to think about this year's unemployment because it's going to weigh on next year's taxes. I'm curious what are the things that Intuit can do because the story has been that you've been gaining market share every single year, but this year is an exceptionally bad year for unemployment sadly, and I'm curious, what is Intuit going to be doing differently to keep its growth profile as strong as it has been on the consumer tax side going into next year. Thank you so much.

Sure, Kash. Great to hear your voice, and hope you're doing well and safe and sound. Let me start with your last question first, and you're very right. It is sad to see this kind of an unemployment rate and we are all hopeful that at some point things will rebound and folks will be able to get back to work. I think what I would say is because unemployment rate was actually very low through March, and when you get unemployment income, we don't actually foresee an impact to tax next year because you still have to do your taxes because you were employed and you have unemployment income and so which means you have to do your taxes. So we actually do not see an impact from the number of people that will need to file IRS, when I look at the total number of IRS returns, this shouldn't have a dramatic impact for the reasons that I mentioned. The second is we are very focused on how we help serve these customers through our Live platform, and we believe that this could really be an impetus to deliver a great experience to deliver higher confidence and for you to be able to do it from the comfort of your home. So that's the answer to the question around unemployment. Headline news is folks are still going to have to do their taxes because unemployment rate was so low for the first several months of the year and you have to do your taxes because of unemployment income. The second in terms of indicators that we're looking at, I would say there are a few. One is just the number of workers and employees that are for instance tracking their time or are tracking their time through TSheets…

Thank you. And ladies and gentlemen, that is all the time we have for questions today. Would you like to close with any additional remarks?

Yes, I will. First of all, thank you for everyone's time and for joining today and your thoughtful questions. I would like to just close by once again, thanking our employees for just the incredible work that they've done being by the side of our customers and being empathetic and compassionate for what they've having to go through and also just the partnerships with our partners. I wish all of you on the call well. Please stay healthy. Take care of yourself, and we look forward to talking to you at the next earnings call. Take care, everybody.

Ladies and gentlemen, thank you for participating. This concludes today's conference call.