Intuit (INTU) Stock Plunges 10% in After-Hours Trading on Disappointing FY2027 Outlook

Key Takeaways

• Intuit shares plummeted more than 10% in after-hours trading to $320.88 following disappointing fiscal 2027 guidance
• The apparent earnings “miss” stems primarily from an accounting methodology shift that now incorporates stock-based compensation into adjusted metrics
• The genuine issue lies in revenue projections: $23.28B to $23.51B for FY2027, representing 9-10% growth versus last year’s 14%
• TurboTax experienced a 2% decline in units during the quarter; Mailchimp projections range from flat to marginally negative
• CEO Sasan Goodarzi admitted the company faces mounting AI-driven competition and may implement price reductions to defend market position

Intuit delivered strong results for its fiscal fourth quarter, with adjusted earnings per share of $4.03 surpassing analyst expectations of $3.59. The company’s revenue reached $4.35 billion, marking a 14% year-over-year increase and exceeding the consensus estimate of $4.27 billion. Credit Karma demonstrated robust performance with 16% growth to $743 million, while the Global Business Solutions Group expanded 14% to $3.4 billion.

However, the positive momentum evaporated when management unveiled its forward-looking projections.

Shares of Intuit finished regular trading at $357.46, already declining 3.37%. In extended trading, the stock shed an additional $36.58, representing approximately 10%, settling at $320.88.

Intuit Inc., INTU

Management projected fiscal 2027 adjusted EPS between $22.88 and $23.12, significantly below the Street’s consensus of approximately $27.30. On the surface, this represented a substantial disappointment.

However, the reality is more nuanced. Effective August 1, Intuit modified its adjusted earnings methodology to incorporate stock-based compensation expenses. This accounting change alone represents $5.81 per share of the perceived shortfall. Excluding this adjustment, the guidance actually exceeds previous analyst expectations.

Revenue Deceleration Emerges as Primary Concern

The genuine source of investor concern centers on revenue performance. Intuit forecasts FY2027 revenue between $23.28 billion and $23.51 billion, representing growth of 9% to 10%. This falls short of analyst projections of $23.7 billion and marks a significant deceleration from this year’s 14% expansion.

Customer acquisition is advancing at merely 3%, indicating the company depends heavily on pricing increases and product mix optimization rather than expanding its user base.

TurboTax experienced a 2% unit decline during the quarter. Mailchimp guidance suggests performance ranging from a 1% contraction to flat results. The legacy desktop segment is anticipated to contract in the low single digits.

Credit Karma and the Global Business Solutions Group present brighter prospects, with anticipated growth of 11-13% and 13-14% respectively.

Management characterizes this approach as intentional, emphasizing customer acquisition and market share expansion over maximizing immediate revenue per customer.

Artificial Intelligence Competition Intensifies

CEO Sasan Goodarzi acknowledged in a media appearance that Intuit confronts genuine competitive threats from AI technologies and may need to reduce pricing to maintain market share. These remarks, delivered simultaneously with the guidance announcement, amplified the after-hours decline.

Intuit’s stock had already suffered more than 40% depreciation year-to-date prior to the earnings release, pressured by broader software sector concerns that AI capabilities could displace traditional subscription revenue models.

The company has taken steps to address this challenge. It enhanced Intuit Intelligence within QuickBooks Online Advanced and Intuit Enterprise Suite, incorporating conversational AI functionality. Additionally, Intuit established a multi-year partnership with OpenAI, committing over $100 million to integrate Intuit-powered financial applications into ChatGPT.

As of July, the company maintained $7.2 billion in cash reserves, repurchased $5.5 billion in stock over the past year, and retains $7.9 billion in remaining buyback authorization.

Analyst consensus currently stands at Moderate Buy, reflecting 13 Buy ratings, 6 Hold ratings, and 2 Sell ratings from 21 covering analysts. The mean price target of $404.15 suggests approximately 13% upside potential from Tuesday’s closing price.

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