Shares of Intuit Inc. plunged 20 percent after the financial software firm projected slowing growth and announced significant job cuts, overshadowing a fiscal third-quarter earnings beat and a raised full-year forecast.
"We lost on price," CEO Sasan Goodarzi said on the company's earnings call, referring to increased competition for price-sensitive do-it-yourself tax filers, a segment the company is now consciously moving away from.
For the quarter ended April 30, Intuit reported revenue of $8.6 billion, a 10 percent year-over-year increase, with adjusted earnings of $12.80 per share. The company raised its full-year adjusted EPS guidance to a range of $23.80 to $23.85, implying 18 percent growth. However, revenue in the core TurboTax business grew just 7 percent.
The stock's worst single-day drop in over 20 years reflects investor anxiety that Intuit's pivot toward higher-value AI-assisted services could be threatened by new AI competitors, just as its legacy DIY business shows signs of slowing. The next major test for the strategy comes in August with the planned launch of autonomous workflows and consumption-based pricing.
Despite the sharp sell-off, Intuit's management is pushing forward with a strategic shift from flat subscriptions to a model based on AI-powered services and task-based pricing. The company's QuickBooks Online Accounting revenue grew a robust 22 percent, and its TurboTax Live service for assisted filing is expected to grow 36 percent this year. This shift is driving an 11 percent increase in average revenue per user (ARPU), which has so far offset a 2 percent decline in total online tax filing units.
The market's concern centers on whether this transition can happen fast enough and if the new high-value services can build a durable moat against emerging AI tools. Intuit's plan to reduce its workforce by approximately 3,000 employees, or 17 percent, while framed as a move to simplify the organization, has added to investor unease about the company's growth trajectory.
Intuit boosted its full-year revenue forecast to between $21.34 billion and $21.37 billion. Alongside the results, the board authorized a new $8 billion share repurchase program and increased the quarterly dividend by 15 percent to $1.20 per share. These moves, typically cheered by investors, were not enough to outweigh the strategic concerns raised by the report.
The guidance for 18 percent earnings growth on 13-14 percent revenue growth shows operating leverage is building. However, the market is now pricing in the risk that AI could add more costs than expected or fail to drive enough high-margin revenue to justify the company's valuation.
The stock's decline puts it at its lowest level since early 2023, testing key technical support levels. Investors will now be closely watching the August product launches for evidence of paid adoption and the company's ability to monetize its significant AI investments.
This article is for informational purposes only and does not constitute investment advice.
