Segment Information

3 Months Ended

Oct. 31, 2022

Segment Reporting [Abstract]

Segment Information

12. Segment Information

We have defined our four reportable segments, described below, based on factors such as how we manage our operations and how our chief operating decision maker views results. We define the chief operating decision maker as our Chief Executive Officer and our Chief Financial Officer. Our chief operating decision maker organizes and manages our business primarily on the basis of product and service offerings.

On November 1, 2021, we acquired Mailchimp in a business combination. Mailchimp is part of our Small Business & Self-Employed segment and its revenue is primarily included within Online Services in the revenue disaggregation below. We have included the results of operations of Mailchimp in our condensed consolidated statements of operations from the date of acquisition.

On August 1, 2022, to better align our personal finance strategy, our Mint offering moved from our Consumer segment to our Credit Karma segment. Revenue and operating results for Mint are not significant and the previously reported segment results have not been reclassified. Effective August 1, 2022, the operating results for Mint are included in the Credit Karma segment.

On August 1, 2022, we renamed our ProConnect segment as the ProTax segment. This segment continues to serve professional accountants.

Small Business & Self-Employed: This segment serves small businesses and the self-employed around the world, and the accounting professionals who assist and advise them. Our QuickBooks offerings include financial and business management online services and desktop software, payroll solutions, time tracking, merchant payment processing solutions, and financing for small businesses. Our Mailchimp offerings include e-commerce, marketing automation, and customer relationship management.

Consumer: This segment serves consumers and includes do-it-yourself and assisted TurboTax income tax preparation products and services sold in the U.S. and Canada.

 Credit Karma: This segment serves consumers with a personal finance platform that provides personalized recommendations of credit card, home, auto and personal loans, and insurance products; online savings and checking accounts through an FDIC member bank partner; and access to their credit scores and reports, credit and identity monitoring, credit report dispute, and data-driven resources. Our Mint offering is a personal finance offering which helps customers track their finances and daily financial behaviors.

ProTax: This segment serves professional accountants in the U.S. and Canada, who are essential to both small business success and tax preparation and filing. Our professional tax offerings include Lacerte, ProSeries, and ProConnect Tax Online in the U.S., and ProFile and ProTax Online in Canada.

All of our segments operate primarily in the United States and sell primarily to customers in the United States. Total international net revenue was approximately 10% of consolidated net revenue for the three months ended October 31, 2022, and 6% for the three months ended October 31, 2021.

We include expenses such as corporate selling and marketing, product development, general and administrative, and non-employment related legal and litigation settlement costs, which are not allocated to specific segments, in unallocated corporate items as part of other corporate expenses. For our Credit Karma reportable segment, segment expenses include all direct expenses related to selling and marketing, product development, and general and administrative. Unallocated corporate items for all segments include share-based compensation, amortization of acquired technology, amortization of other acquired intangible assets, goodwill and intangible asset impairment charges, and professional fees and transaction charges related to business combinations.

The accounting policies of our reportable segments are the same as those described in the summary of significant accounting policies in Note 1 to the financial statements in Part II, Item 8 of our Annual Report on Form 10-K for the fiscal year ended July 31, 2022 and in Note 1, "Description of Business and Summary of Significant Accounting Policies – Significant Accounting Policies" in this Quarterly Report on Form 10-Q. Except for goodwill and purchased intangible assets, we do not generally track assets by reportable segment and, consequently, we do not disclose total assets by reportable segment.

The following table shows our financial results by reportable segment for the periods indicated.

	Three Months Ended
(In millions)	October 31, 2022		October 31, 2021
Net revenue:
Small Business & Self-Employed	$	1,988	$	1,443
Consumer	150		120
Credit Karma	425		418
ProTax	34		26
Total net revenue	$	2,597	$	2,007
Operating income (loss):
Small Business & Self-Employed	$	1,179	$	921
Consumer	11		(11)
Credit Karma	94		169
ProTax	(6)		(11)
Total segment operating income	1,278		1,068
Unallocated corporate items:
Share-based compensation expense	(422)		(280)
Other corporate expenses	(618)		(525)
Amortization of acquired technology	(41)		(15)
Amortization of other acquired intangible assets	(121)		(53)
Total unallocated corporate items	(1,202)		(873)
Total operating income	$	76	$	195

Revenue classified by significant product and service offerings was as follows:

	Three Months Ended
(In millions)	October 31, 2022		October 31, 2021
Net revenue:
QuickBooks Online Accounting	$	668	$	519
Online Services	681		326
Total Online Ecosystem	1,349		845
QuickBooks Desktop Accounting	312		267
Desktop Services and Supplies	327		331
Total Desktop Ecosystem	639		598
Small Business & Self-Employed	1,988		1,443
Consumer	150		120
Credit Karma	425		418
ProTax	34		26
Total net revenue	$	2,597	$	2,007