Intuit Beats Wall Street on Earnings, Then Warns Growth Will Slow as It Retools TurboTax Pricing

Intuit Inc. beat Wall Street's fourth-quarter profit and revenue targets late Tuesday, capping a fiscal year of double-digit growth. But the maker of TurboTax, QuickBooks and Credit Karma unsettled investors by forecasting a sharp slowdown for the year ahead, telling analysts it is deliberately trading near-term profit for a rebuilding effort in its tax-preparation business, where price-sensitive customers have been defecting to cheaper, artificial-intelligence-driven alternatives.

Shares of the Mountain View, California, company fell as much as 8.7% in after-hours trading Tuesday to $326.39, extending a 3.4% decline during the regular session, according to a MarketScreener report on the after-hours move. The stock extended its losses into Wednesday's premarket session, according to Seeking Alpha's account of the trading, as investors digested a fiscal 2027 outlook well below what analysts had modeled.

The numbers

For the fiscal fourth quarter ended July 31, Intuit reported revenue of $4.4 billion, up 14% from a year earlier, with non-GAAP earnings of $4.03 a share, comfortably ahead of the roughly $3.58 analysts had expected. For the full fiscal year, revenue rose 14% to $21.4 billion, and both GAAP and non-GAAP diluted earnings per share grew 20%, to $16.46 and $24.27 respectively, according to the company's fourth-quarter and full-year results release and the accompanying Form 8-K filed with the Securities and Exchange Commission.

The trouble was guidance. Intuit told investors to expect total revenue of $23.28 billion to $23.51 billion in fiscal 2027 — growth of just 9% to 10%, down from 14% this year. Within that, its Global Business Solutions segment, which houses QuickBooks, is expected to grow 13% to 14%, while the Consumer segment, dominated by TurboTax and Credit Karma, is guided to grow only 4% to 6%. TurboTax itself is expected to grow just 2% to 3% in fiscal 2027, after growing 7% this year, chief financial officer Sandeep Aujla told analysts on the earnings call, according to the company's prepared remarks. Credit Karma growth is expected to cool to 11%-13% from 20% this year, and Desktop revenue is expected to decline in the low single digits as customers migrate to online products.

Intuit is also raising its dividend 15% to $1.38 a share, payable Oct. 16, and it repurchased $5.5 billion of stock during the fiscal year, up 96% from a year earlier — capital-return figures confirmed in the earnings materials.

How we got here

The guidance reset follows months of warnings from Wall Street that Intuit's flagship tax-prep business was vulnerable to a new wave of artificial-intelligence tools that can process a return for a fraction of what TurboTax charges. In June, Goldman Sachs analyst Gabriela Borges downgraded Intuit to Sell and slashed her price target to $276 from $519, arguing that AI models could eventually process tax returns for roughly 12 cents apiece, compared with TurboTax's average revenue of about $162 per return, according to Yahoo Finance's report on the downgrade.

On Tuesday's call, Intuit's own numbers bore that thesis out. Total online paying customers reached 8.9 million at the end of the fiscal year, up just 3% — roughly two percentage points slower than the prior year's growth — and chief executive Sasan Goodarzi told analysts the company had "lost quality DIY customers to lower-cost providers this year," according to the company's earnings-call script.

"Price is now the number one reason customers leave TurboTax."

Goodarzi made that admission directly in his prepared remarks, filed as part of Intuit's fourth-quarter conference call transcript. He said the company is "deliberately shifting our execution and investments toward accelerating customer acquisition and market share growth," even if that means giving up some short-term revenue per customer.

Who is affected

The clearest financial consequence falls on TurboTax's do-it-yourself tax business. Intuit said it is deliberately accepting lower average revenue per customer on DIY filing to win back price-sensitive customers and grow its share of the roughly 150 million returns filed electronically with the IRS each year — a market where its own guidance assumes total filers stay flat. To do that, the company is overhauling entry-level pricing, expanding where customers can find TurboTax, including "through leading LLM experiences," and pushing further into a fully AI-native filing experience, according to the earnings script. A summary of the earnings call from BigGo Finance characterized the shift as an attempt to "reclaim DIY tax customers and rebuild the QuickBooks funnel."

Small-business and accounting customers are less directly touched by the tax-pricing reset, but they are central to where Intuit says its money is going next: the mid-market, a segment Aujla pegged at nearly $90 billion in addressable revenue. Mid-market revenue grew 39% in fiscal 2026, and the company is rolling out free and low-cost entry tiers — QuickBooks Free and QuickBooks Lite — that had signed up more than 20,000 active or converted customers as of last month, according to the transcript.

Employees are also affected. Aujla told analysts that fiscal 2027 margin expansion is expected to be driven partly by "savings from the workforce changes announced last quarter," a reference to a restructuring plan the company disclosed earlier this year, even as it increases spending on sales, marketing and new-customer acquisition. Shareholders, meanwhile, are being asked to accept a lower non-GAAP earnings-per-share growth commitment of "at least high teens" annually going forward, down from the 20% growth Intuit delivered in fiscal 2026 — a change Aujla attributed partly to a separate accounting shift under which the company will now count stock-based compensation as an expense in its non-GAAP results, rather than excluding it, beginning in fiscal 2027.

Reaction and what happens next

The market reaction was unambiguous: a beat-and-guide-down pattern that has become familiar among high-growth software companies facing new AI competition. Intuit is not alone in that respect, but the scale of the deceleration it flagged — a full five percentage points of revenue growth, concentrated in its highest-margin consumer business — was larger than analysts had modeled heading into the print, according to the MarketScreener and Seeking Alpha accounts of the selloff, both of which noted Intuit's fiscal 2027 revenue guide of roughly $23.3 billion to $23.5 billion trailed consensus estimates near $23.7 billion.

Company executives framed the reset as a choice rather than a surprise. "This is an important moment for Intuit," Goodarzi told analysts, according to the earnings script, adding that the company understands "the gaps" in its execution and has "a clear plan to address them." He pointed to strength elsewhere in the business as evidence the strategy is working: mid-market annualized revenue for Intuit's higher-end small-business platform, Intuit Enterprise Suite, quadrupled year over year to surpass $145 million in the fourth quarter, and more than 150,000 accountants are now using the company's newly launched AI-native practice-management suite.

Intuit said it plans to detail its longer-term strategy further at an investor day next month, and executives set multi-year targets in the meantime: 10% to 15% annual revenue growth for the Global Business Solutions segment and 4% to 8% for Consumer over the next three years, with a company-wide goal of returning to "durable double digit revenue growth" over the long run. For now, the immediate test comes in the first quarter of fiscal 2027, for which Intuit guided to roughly 11% revenue growth and non-GAAP earnings of $2.44 to $2.48 a share — figures investors will be watching closely for early evidence that the pricing reset is winning back customers rather than simply eroding margins.