Intuit announced in February that it would acquire Credit Karma for $7.1 billion in cash and stock, in a deal that capped off a quick rise to success for Credit Karma since it was founded in 2007.
The company, which currently has the largest engaged member base in consumer digital finance with more than 100 million members and 37 million monthly active users, has nearly tripled the growth of its member base over the past five years. In addition, it has created a marketplace made up of more than 100 financial service providers.
Credit Karma was valued at $4 billion in 2018, with investors including private-equity firm Silver Lake and financial technology venture firm Ribbit Capital. Before this deal, it was reportedly looking into an initial public offering, but ultimately decided to go the sale route.
Both companies have said that they believe the sale will be finalized in the second half of 2020, subject to regulatory approvals. In the meantime, Credit Karma has had to cut its employees’ salaries until the deal is complete due to the current shaky economy.
Citing numerous sources, Bloomberg reported that pay cuts will be based on seniority, starting at 15 percent, and rising to 50 percent for executives. In addition, there is a freeze on promotions, as well as plans to move the company’s offices from San Francisco to Oakland. Employees who opt not to take the pay cut or move to Oakland are eligible for a buyout that includes six weeks’ salary.
“In this challenging economic environment our priorities remain the same—supporting our employees and supporting our members,” a Credit Karma spokeswoman said in an emailed statement.
In addition to providing free credit scores online, Credit Karma also offers other services, including the ability to apply for a credit card, find an auto loan and open a savings account. The company recently announced the integration Credit Karma Tax with Credit Karma Savings, allowing filers to automatically deposit their refunds or a portion of it into a free, high-yield savings account with 18 times the national average APY.
Once the deal with Intuit is complete, Credit Karma is expected to remain a separate entity, with CEO Kenneth Lin reporting to Intuit chief Sasan Goodarzi.