Intuit, the US financial software company behind TurboTax, QuickBooks, Credit Karma and Mailchimp, beat expectations for its fourth quarter and then watched its shares fall sharply in extended trading.
The stock dropped $36.58, or 10.23%, to $320.88 after hours, having already closed the regular session down 3.37% at $357.46.
The trigger was guidance that appeared, on the surface, to be catastrophic.
The number that was not what it looked like
Intuit guided to adjusted earnings of $22.88 to $23.12 a share for its 2027 financial year, against a consensus of about $27.30.
That gap of more than $4 looks like a collapse in profitability.
It is mostly a definitional change.
From 1 August, Intuit stopped excluding share-based compensation, meaning shares issued to staff as pay, from its adjusted figures.
That change alone accounts for $5.81 a share of the new guidance, and $2.020 billion of forecast operating expense.
Add it back and the company is guiding above the old consensus, not $4 below it.
The first-quarter figure tells the same story.
Guidance of $2.44 to $2.48 against a $4.02 consensus implies a 39% shortfall, but strip out the $1.48 stock compensation charge and the midpoint sits at $3.94 against $4.04, a shortfall of about 2.5%.
Where the real disappointment sits
The revenue outlook is a different matter, and this is where the selling has a foundation.
Intuit expects revenue of $23.28 billion to $23.51 billion in the coming year, growth of 9% to 10%, down from 14% in the year just ended and below the roughly $23.7 billion analysts had modelled.
Customer growth of about 3% suggests the company is leaning on price and product mix rather than winning new users.
TurboTax units fell 2% in the quarter, Mailchimp is guided to somewhere between flat and a 1% decline, and the desktop business is expected to shrink in low single digits.
Management framed this as a deliberate reset, prioritising customer acquisition and market share over near-term revenue per customer.
Sasan Goodarzi, chief executive, said the company was resetting expectations from a position of strength.
The bigger question hanging over the sector
The context matters more than the quarter.
Intuit shares had already fallen more than 40% this year, caught in a broader sell-off in application software driven by fears that generative AI lets users do for themselves what they previously paid a subscription for.
Jefferies had warned two days before results that 2027 forecasts looked too optimistic.
Against that backdrop, investors were primed to read a slower growth forecast as confirmation rather than conservatism.
So the earnings reaction was an overreaction, but the growth reset was not imagined.
The company held $7.2 billion in cash at the end of July, bought back $5.5 billion of stock last year and has $7.9 billion of authorisation left.
