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

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

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

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

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

Q3 Sales, Earnings Beat Estimates

In its fiscal third quarter, the key tax filing season, Intuit reported diluted earnings per share (EPS) of $8.42, with sales advancing 12% year-over-year to $6.74 billion. Both were better 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% advance 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 approximately 13% year-over-year growth, compared to the previous 11% to 12% growth forecast. 

Stock Falls Into Negative 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.