Rob Reid: At the enterprise level, what you have is Oracle with their enterprise ERP solution, SAP, and Workday. What’s really interesting is that from an overall targeted addressable market, Intuit is going after the largest segment. If you break out Intuit’s overall P&L, they are the market leader from a revenue perspective.
A very small business generates more money than an enterprise. The midmarket also has a vast opportunity from a targeted perspective. In actuality, it’s actually Intuit, NetSuite, and Intacct that have the big opportunity going forward. We’re providing solutions that only big companies used to be able to afford. Now with cloud solutions, what we’re seeing is the deployment of this technology to millions of companies as opposed to the top 5,000.
Sramana Mitra: This segmentation that you provided, what is the revenue mapping of this? You gave us an employee base mapping – one employee to 20 employees is the sweet spot of Intuit. Beyond that is Intacct and NetSuite. How does that translate into revenue numbers?
Rob Reid: Are you asking from a customer perspective?
Sramana Mitra: Yes.
Rob Reid: Depending on the version of QuickBooks you’re getting, you can get it anywhere from a couple of hundred dollars to a couple of thousand dollars. It depends on what you’re buying: the on premise or the cloud solution. Let’s just say a thousand to two thousand from a subscription perspective.
Sramana Mitra: I’m not asking about the pricing of the product. I’m asking about what is the revenue levels of those customers at which point people tend to switch. 20 employees, what does that translate into? $100,000? Is it $2 million? What is the corresponding revenue to the 20-person threshold?
Rob Reid: I’m going to have to give you a range because depending on the vertical market, it could vary wildly. Let’s just say that for an organization that has 20 people and is a software company, it might be just a few million dollars.
It could be dramatically different. I would say that typically, most organizations that are growth-oriented with somewhere between 50 and 250 employees would move to a midmarket type of solution. The dollars associated with them could be a few million dollars to tens of millions of dollars. It really depends on the vertical.
Technology companies move faster than most industries. Professional services organizations who have lots of costs want to figure out how they maximize the return on their consultants. They might move sooner. A manufacturing company will always be the last to move because there’s so many processes built in. They wait till they’re very large.
Sramana Mitra: Is software your sweet spot?
Rob Reid: We go to market from a vertical perspective. We want to be the big fish in a small pond as opposed to being a small fish in a big pond. We first concentrated on software. It is still the largest vertical for us. Professional services is number two. Non-profit organizations is number three.
Interesting enough, non-profit has been growing at about 100%. We’re expecting it will become number one for us in the next year. Then we’re doing really well in a segment of financial services and also doing well in healthcare and hospitality.
That sounded like a really long list but that has been built up over a 10-year period. We have teams dedicated to each one of those verticals I went through.
This will be interesting for your listeners and readers. It’s not just a vertical perspective. We go into micro-verticals. I mentioned non-profit being our fastest-growing area. We don’t look to serve non-profits. We look to serve associations, memberships, healthcare non-profit. We segment the verticals and then we look at how we can be the best in the world in that specific micro-vertical. If you boil down our strategy, it’s all about focus on a specific customer type. That’s the main reason why we’ve outgrown all of our competitors from a percentage growth perspective.