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Segment Information | 6 Months Ended
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Jan. 31, 2023
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 material 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 9% and 10% of consolidated net revenue for the three and six months ended January 31, 2023, respectively. Total international net revenue was approximately 10% and 8% for the three and six months ended January 31, 2022, respectively. 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 |  | Six Months Ended
(In millions) | January 31, 2023 |  | January 31, 2022 |  | January 31, 2023 |  | January 31, 2022
Net revenue: |  |  |  |  |  |  |
Small Business & Self-Employed | $ | 1,897 |  |  | $ | 1,581 |  |  | $ | 3,885 |  |  | $ | 3,024 |
Consumer | 516 |  |  | 411 |  |  | 666 |  |  | 531 |
Credit Karma | 375 |  |  | 444 |  |  | 800 |  |  | 862 |
ProTax | 253 |  |  | 237 |  |  | 287 |  |  | 263 |
Total net revenue | $ | 3,041 |  |  | $ | 2,673 |  |  | $ | 5,638 |  |  | $ | 4,680 |
Operating income: |  |  |  |  |  |  |
Small Business & Self-Employed | $ | 1,021 |  |  | $ | 773 |  |  | $ | 2,200 |  |  | $ | 1,694 |
Consumer | 177 |  |  | 53 |  |  | 188 |  |  | 42 |
Credit Karma | 96 |  |  | 141 |  |  | 190 |  |  | 310 |
ProTax | 211 |  |  | 195 |  |  | 205 |  |  | 184 |
Total segment operating income | 1,505 |  |  | 1,162 |  |  | 2,783 |  |  | 2,230 |
Unallocated corporate items: |  |  |  |  |  |  |
Share-based compensation expense | (423) |  |  | (336) |  |  | (845) |  |  | (616) |
Other corporate expenses | (650) |  |  | (607) |  |  | (1,268) |  |  | (1,132) |
Amortization of acquired technology | (41) |  |  | (42) |  |  | (82) |  |  | (57) |
Amortization of other acquired intangible assets | (121) |  |  | (121) |  |  | (242) |  |  | (174) |
Total unallocated corporate items | (1,235) |  |  | (1,106) |  |  | (2,437) |  |  | (1,979) |
Total operating income | $ | 270 |  |  | $ | 56 |  |  | $ | 346 |  |  | $ | 251 |
Revenue classified by significant product and service offerings was as follows:
| Three Months Ended |  | Six Months Ended
(In millions) | January 31, 2023 |  | January 31, 2022 |  | January 31, 2023 |  | January 31, 2022
Net revenue: |  |  |  |  |  |  |
QuickBooks Online Accounting | $ | 696 |  |  | $ | 547 |  |  | $ | 1,364 |  |  | $ | 1,066 |
Online Services | 695 |  |  | 574 |  |  | 1,376 |  |  | 900 |
Total Online Ecosystem | 1,391 |  |  | 1,121 |  |  | 2,740 |  |  | 1,966 |
QuickBooks Desktop Accounting | 215 |  |  | 169 |  |  | 527 |  |  | 436 |
Desktop Services and Supplies | 291 |  |  | 291 |  |  | 618 |  |  | 622 |
Total Desktop Ecosystem | 506 |  |  | 460 |  |  | 1,145 |  |  | 1,058 |
Small Business & Self-Employed | 1,897 |  |  | 1,581 |  |  | 3,885 |  |  | 3,024 |
Consumer | 516 |  |  | 411 |  |  | 666 |  |  | 531 |
Credit Karma | 375 |  |  | 444 |  |  | 800 |  |  | 862 |
ProTax | 253 |  |  | 237 |  |  | 287 |  |  | 263 |
Total net revenue | $ | 3,041 |  |  | $ | 2,673 |  |  | $ | 5,638 |  |  | $ | 4,680 |

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 31 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8924-108599 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 34 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8981-108599 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 21 -Subparagraph (a) -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8721-108599 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 40 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e9031-108599 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (f) -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8933-108599 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (e) -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8933-108599 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 26 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8844-108599 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 41 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e9038-108599 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (d) -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8933-108599 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 22 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8736-108599 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 42 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e9054-108599 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 15 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8657-108599 Reference 13: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 21 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8721-108599 Reference 14: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -URI https://asc.fasb.org/topic&trid=2134510 + Details
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