Intuit to boost Credit Karma’s insurance tech with Zendrive acquisition

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MOUNTAIN VIEW, Calif. – Intuit Inc. (NASDAQ:), known for its financial technology products including TurboTax and Credit Karma, announced it is set to acquire technology from mobility risk intelligence company Zendrive. The acquisition, which includes key personnel like Zendrive CEO Dennis Ellis and CTO Pankaj Risbood, aims to enhance Credit Karma’s usage-based auto insurance feature, Karma Drive.

Karma Drive offers Credit Karma members a chance to receive real-time feedback on their driving and view potential insurance discounts based on their driving habits before committing to a policy. This program, leveraging telematics data, has already facilitated over 4 million discounted policy offers. With the acquisition of Zendrive’s technology, Credit Karma intends to make usage-based insurance more widely available, emphasizing transparency and consent in the process.

Joe Kauffman, president of Credit Karma, highlighted the current economic climate, noting the rise in insurance costs and the need for Americans to reduce driving-related expenses amidst high inflation. He expressed the company’s commitment to providing personalized discounts reflecting safe driving behaviors, independent of traditional insurance pricing methods like credit scores.

Zendrive has been collaborating with Credit Karma since the latter launched its Karma Drive program over three years ago, which has since enrolled more than 6 million members. Ellis of Zendrive echoed the sentiment of shared values with Intuit, emphasizing the goal of offering fair insurance based on actual driving habits.

The transaction, expected to close in Q4 FY24, aligns with Intuit’s broader goal of doubling its customers’ household savings rate by 2030. While the terms of the deal were not disclosed, the acquisition is set to deepen Intuit’s investment in insurance to support Credit Karma members in achieving significant savings on auto insurance.

Legal advisement for the transaction was provided by Latham & Watkins LLP for Intuit, and Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP, along with financial advisement from Evercore for Zendrive.

In other recent news, Intuit Inc. has been the subject of multiple financial analyses. The company’s robust performance in its TurboTax, QuickBooks, and Credit Karma segments has led to significant revenue growth. Analysts have raised their earnings per share estimates for the fiscal year 2024 to approximately $16.80 from $16.32.

BofA Securities, Edward Jones, Susquehanna, and Piper Sandler have all maintained positive ratings on Intuit’s stock, despite some adjustments to their price targets.

InvestingPro Insights

As Intuit Inc. (NASDAQ:INTU) gears up to enhance its Credit Karma offerings through the acquisition of Zendrive’s technology, the company’s financial health and market positioning remain pivotal for investors tracking its growth journey. Here are some vital insights from InvestingPro:

Intuit boasts a substantial Market Cap of 166.01B USD, reflecting its significant presence in the financial technology space. The company’s Gross Profit Margin stands at an impressive 79.49% for the last twelve months as of Q3 2024, underlining its ability to maintain high profitability levels. Furthermore, Intuit’s Revenue Growth for the same period was 12.39%, indicating a robust capacity for increasing its earnings.

These metrics, coupled with Intuit’s commitment to enhancing its insurance offerings, suggest a strategic move to leverage its strong financial standing to diversify and deepen its services. Intuit’s acquisition of Zendrive’s technology is poised to make usage-based insurance more accessible, potentially driving customer growth and retention.

For investors seeking a comprehensive analysis, there are additional InvestingPro Tips available, such as Intuit’s impressive dividend history, with the company having raised its dividend for 13 consecutive years, and its status as a prominent player in the Software industry. For more detailed insights and tips, including those on Intuit’s valuation multiples and profitability predictions, visit https://www.investing.com/pro/INTU.

InvestingPro offers an extensive range of tips, with 15 more tips available for Intuit, providing a deeper dive into the company’s financial health and market position. Interested readers can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, unlocking a wealth of investment knowledge and data-driven strategies.

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