Intuit's earnings miss is largely an accounting illusion, but the revenue slowdown is real

Intuit's earnings miss is largely an accounting illusion, but the revenue slowdown is real

Intuit Inc (NASDAQ:INTU, XETRA:ITU) , 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.

Scratching the surface 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 r...