Over the weekend the Wall Street Journal reported that Mountain View-based financial services software firm Intuit ($INTU) is trying to buy industry upstart Credit Karma ($PRIVATE:CREDITKARMA) in a deal worth around $7 billion.
(Update: the deal was announced Monday afternoon, February 24).
It's a deal that stands to shake up how millions of Americans and small business owners plot out tax prep - and who they do business with. A look at the data from each company signals key points around the M&A discussions, as well as the rationale for Intuit to go out and spend about 1/10 its market capitalization.
First, there's that old market chestnut that is the hiring dip. From healthcare to technology to other financial services deals, it's not uncommon to see one, or both, companies doing the M&A dance to begin to slim down in anticipation of culture integrations (and, staffing redundancies, as the merger parlance goes, or, firings and layoffs, to the rest of us). And, for Credit Karma - as shown in the chart above - job postings plummeted more than 60% from their October 2019 peak.
Earlier this February, ratings for Credit Karma in the Apple ($AAPL) store lunged forward a staggering 166% - and, perhaps unsurprisingly, so did ratings for Intuit products, like TurboTax (not shown). What accounts for more users rushing to signal their approval? Tax season, one of the things people tend to approve of the least.
Similar to Credit Karma's tax-season ratings-surge, Intuit apps in the Apple Store that help consumers navigate credit and tax season issues also saw similar dramatic increases in user input.
After Credit Karma's Apple Store Ratings Count shot up, they were much closer to in-line with its total tally in the Google ($GOOG) Play Store (not shown), which has grown at a much more steady trajectory. In both app stores, Credit Karma's rating indicates high user satisfaction, as well.
Though Credit Karma was launched in 2007, garnering nearly $400 million in capital and backers on its roster like Silver Lake and Ribbit Capital, it only recently began offering free tax-prep software. And, seeing its product nearly immediately rival Intuit services in terms of app store engagement, should have spurred Intuit execs to action. We don't get a vote in all this, but hopes at Thinknum are high that they named the merged entity TurboKarma.
About the data:
Thinknum tracks companies using the information they post online - jobs, social and web traffic, product sales, and app ratings - and creates data sets that measure factors like hiring, revenue, and foot traffic. Data sets may not be fully comprehensive (they only account for what is available on the web), but they can be used to gauge performance factors like staffing and sales.
- Morgan Stanley is buying E*Trade - see the chart that signaled a deal was in the works
- The biggest tell for M&A showed up again for Charles Schwab's deal
- Publicis' $4 billion Epislon deal was tipped off by a 43% drop in hiring