Intuit's Financial Outlook: Navigating Growth and AI Challenges
Intuit has demonstrated remarkable consistency in its financial software business, evidenced by a revenue increase from $9.6 billion in fiscal 2021 to $18.8 billion in fiscal 2025. The company projects fiscal 2026 revenue to reach approximately $21.4 billion, marking an expected growth rate of 13-14%. Market projections suggest revenues could hit around $32.8 billion by fiscal 2030.
In the third quarter of fiscal 2026, Intuit reported revenue of $8.56 billion, a 10% increase from the previous year. The company's non-GAAP earnings per share also saw a 10% rise, reaching $12.80. The Global Business Solutions Online Ecosystem, including QuickBooks, experienced a 19% increase in revenue, while Credit Karma revenue rose by 15%, propelled by personal loans and auto insurance products. Intuit's services now reach approximately 100 million global customers through TurboTax, QuickBooks, Credit Karma, and Mailchimp.
The stock has declined 67% from its 52-week peak of $813.70. This depreciation does not reflect declining business fundamentals but rather a market adjustment regarding the perceived value of Intuit's future earnings potential.
Challenges in AI-Driven Competition
The trigger for this downward stock movement was CEO Sasan Goodarzi's comment during the Q3 earnings call, highlighting pricing losses in the do-it-yourself tax filing segment for lower-income individuals. Despite a 7% growth in TurboTax revenue for the quarter, the full-year outlook was slightly reduced. Analyst Gabriela Borges from Goldman Sachs identified competition from AI-driven tax platforms as a key concern, suggesting a potential 18% decrease in TurboTax revenues by fiscal 2025 if AI adoption increases significantly among U.S. filers.
In response, Intuit is bolstering TurboTax Live, its service that integrates human expert review. This segment is anticipated to grow by about 36% this fiscal year, comprising approximately 53% of the total TurboTax revenue. This strategy assumes that the need for professional oversight on complex tax returns will remain resilient against AI improvements.
Future Growth Trajectories and Strategic Moves
Intuit's earnings per share have grown from $9.74 in fiscal 2021 to $20.15 in fiscal 2025, with future projections reaching approximately $37 by fiscal 2030. The stock, valued at $267.72, trades at around 11 times the projected fiscal 2026 earnings, representing a historically low multiple considering the company's growth rate.
TIKR’s valuation model forecasts a mid-range target price of $444 for Intuit, predicting a total return of about 66% over four years, equivalent to 13% annually, contingent upon sustained revenue growth and improving profit margins. The optimistic projection posits a high target of $822, with revenue and margins needing significant improvement, supported by the successful expansion of TurboTax Live and QuickBooks Enterprise Suite.
Intuit's recent organizational restructuring includes a 17% workforce reduction and the issuance of $1.75 billion in senior notes, aiming to streamline operations and maximize savings. Additionally, an $8 billion share repurchase program has been authorized.
Intuit remains a formidable presence with strong cash generation capabilities and a valuation lower than historical standards. The potential threat from AI in the tax segment is acknowledged but remains to be fully realized. Investors who believe in the continued growth of TurboTax Live and QuickBooks may find investment opportunities at current valuations, while others may choose to await further developments in AI-driven competition.