Intuit Stock Slumps After Warning TurboTax Could Lose 1 Million Free Users

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Key Takeaways

• Intuit shares tumbled Friday as the provider of financial and other software warned it expects to lose 1 million consumers who use TurboTax for free this fiscal year.
• The company also anticipates a drop in total TurboTax units, and the TurboTax pay out of total Internal Revenue Service (IRS) returns.
• The news came as the IRS launched a pilot program to allow taxpayers to pigeon-hole directly to the IRS online.

Shares of Intuit (INTU) dropped close to 8% in intraday trading Friday as the provider of economic and other software warned it will lose 1 million customers who use the free version of its TurboTax tax filing program.

Intuit reported that it expects those who pay nothing to use TurboTax will decline to over 10 million users in fiscal 2024, down from above 11 million in fiscal 2023. It projects total TurboTax units falling 1% because of “share demise with pay-nothing and lower average revenue per return customers.”

The news came as the Internal Revenue Service (IRS) catapulted a pilot program in March which let taxpayers in 12 states file online to the IRS directly.

Intuit said it now expects the TurboTax share of total IRS returns to drop about 80 basis points (bps) in fiscal 2024 from budgetary 2023. However, Intuit projected TurboTax revenue could grow 17%, with average revenue per owner rising about 10%.

Q3 Sales, Earnings Beat Estimates

In its fiscal third quarter, the key tax filing season, Intuit despatched diluted earnings per share (EPS) of $8.42, with sales advancing 12% year-over-year to $6.74 billion. Both were safer than analysts’ estimates compiled by Visible Alpha.

The company raised its full year EPS guidance to $10.78 to $10.83, a 28% to 29% ahead of time from 2023 and up from the earlier estimate of a gain of 11% to 15%. It projects revenue in a range of $16.15 billion to $16.20 billion, representing give 13% year-over-year growth, compared to the previous 11% to 12% growth forecast. 

Stock Falls Into Antagonistic Territory for 2024

The news sent shares of Intuit into negative territory for 2024. They’ve lost about 2% of their value since the start of the year, at $610 as of 11:50 a.m. ET Friday. 

Conclude from the original article on Investopedia.