Key Takeaways
- Intuit shares plunged more than 10% in after-hours trading to $320.88 following disappointing fiscal 2027 forward guidance
- The apparent earnings guidance “miss” stems mainly from an accounting methodology shift that now incorporates stock-based compensation into adjusted metrics
- The primary worry centers on revenue projections: $23.28B to $23.51B for FY2027, representing 9-10% expansion versus 14% growth in the prior year
- TurboTax user numbers declined 2% during the quarter; Mailchimp guidance points to flat or marginally negative performance
- CEO Sasan Goodarzi openly addressed emerging AI threats and indicated potential price reductions to defend market position
Intuit delivered respectable fiscal fourth-quarter results, with adjusted earnings per share of $4.03 surpassing the Street’s $3.59 projection. Top-line revenue hit $4.35 billion, representing 14% year-over-year expansion and exceeding the $4.27 billion consensus. Credit Karma revenues climbed 16% to $743 million, while the Global Business Solutions Group increased 14% to $3.4 billion.
However, the optimism evaporated once management unveiled forward guidance.
Intuit shares finished the regular trading day at $357.46, already declining 3.37%. In extended trading, the stock tumbled an additional $36.58, approximately 10%, settling at $320.88.
Management projected fiscal 2027 adjusted EPS between $22.88 and $23.12, substantially below the Street consensus hovering around $27.30. On the surface, this appeared disastrous.
However, the optics are misleading. Effective August 1, Intuit modified its adjusted earnings calculation to incorporate stock-based compensation expenses. This accounting adjustment alone explains $5.81 per share of the variance. Adjusting for this change, the guidance actually exceeds previous expectations.
Decelerating Revenue Growth Takes Center Stage
The genuine concern for shareholders lies in the top-line outlook. Intuit forecasts FY2027 revenue ranging from $23.28 billion to $23.51 billion, translating to 9% to 10% growth. This falls short of analyst projections at $23.7 billion and represents a meaningful deceleration from this year’s 14% expansion.
User base expansion stands at merely 3%, indicating Intuit increasingly depends on price optimization and improved product mix rather than net new customer additions.
TurboTax user counts contracted 2% in the most recent quarter. Mailchimp is anticipated to deliver somewhere between flat results and a 1% decline. The legacy desktop segment is expected to contract at low single-digit rates.
Credit Karma and the Global Business Solutions Group present brighter spots, with anticipated growth rates of 11-13% and 13-14% respectively.
Leadership characterized this trajectory as intentional, emphasizing customer acquisition and market penetration over maximizing short-term revenue per customer.
Emerging AI Rivalry Intensifies Concerns
During a media briefing, CEO Sasan Goodarzi acknowledged that Intuit confronts genuine competitive pressure from artificial intelligence solutions and suggested the company might implement price reductions to preserve market share. These remarks coincided with the guidance release and amplified the negative market reaction.
Intuit shares had already declined more than 40% year-to-date prior to the earnings announcement, pressured by sector-wide anxiety that AI-powered alternatives could displace traditional subscription models.
Intuit has responded competitively. The company enhanced Intuit Intelligence capabilities within QuickBooks Online Advanced and Intuit Enterprise Suite, incorporating conversational AI functionality. Additionally, it secured a multi-year partnership with OpenAI, committing over $100 million to integrate Intuit-enabled financial applications directly into ChatGPT.
The company concluded July with $7.2 billion in cash reserves, repurchased $5.5 billion worth of shares over the past year, and maintains $7.9 billion in remaining buyback authorization.
Analyst consensus remains at Moderate Buy, reflecting 13 Buy ratings, 6 Hold ratings, and 2 Sell ratings across 21 analysts covering the stock. The mean price target stands at $404.15, suggesting approximately 13% potential upside from Tuesday’s closing price.
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