Intuit Guided $4 Below Consensus: Its Profit Metric Changed

Five minutes after Tuesday's close on August 25, Intuit reported fiscal 2026. The quarter beat: revenue of $4.35 billion against a $4.27 billion estimate, adjusted earnings of $4.03 a share against $3.59. The year beat too — revenue up 14% to $21.45 billion, adjusted earnings up 20% to $24.27 a share.

Then came the fiscal 2027 outlook, and the stock traded down to $326.39 after hours. One number carried the headlines: the company guided to $22.88–$23.12 a share, while the analyst average compiled by LSEG stood at $27.32. For a company that had just grown earnings 20%, a $4.32 gap looked large.

That gap is not all business deterioration. Part of it comes from an accounting definition Intuit changed on the same day — and comparing the two figures without accounting for it means measuring with two different rulers and reading the difference as height.

By the Numbers

The first three are company disclosures; the fourth is a year of market reaction. Intuit shares had already lost more than 44% in 2026 heading into the print. The overnight drop landed on top of a selloff that had been running all year.

The Definition That Changed on August 1

The line sits in a footnote beneath the guidance table in Intuit's release:

"Effective August 1, 2026, share-based compensation expense will no longer be excluded from Intuit's non-GAAP financial measures."

The rationale is given in the same document: the company views share-based compensation as a recurring component of its compensation program and believes including it reflects core operating results.

Non-GAAP is the second profit figure a company presents after stripping certain items out of the number computed under formal accounting standards. In software, share-based compensation has topped that list for decades. When an employee is paid in stock rather than cash, no money leaves the treasury, but existing shareholders are diluted. Keeping the expense outside profit keeps that dilution off the income statement.

The size of the change is not hidden. Non-GAAP operating income guidance for 2027 is $8.06–$8.15 billion, and the footnote says $2.02 billion of share-based compensation sits inside it. The problem is that headlines do not read footnotes.

The Mechanism: One Forecast, Two Rulers

The cleanest way to see the effect is to reverse the company's own growth percentage.

The same forecast reads as 16% below consensus on one measure and 5% above it on the other. Both are correct arithmetic. Only one of them compares two of the same thing.

None of this means profit is really rising. Share-based compensation is a real cost, and Intuit's new definition is the more honest one. The point is narrower: a figure only tells you the direction of change when the definition is held constant across both years. How to read an earnings report

The Real Slowdown Is in Revenue

Clear away the noise on the profit line and one item is left untouched by the definition. Accounting choices do not move revenue.

Intuit guided 2027 revenue to $23.28–$23.51 billion; the LSEG consensus was $23.72 billion. The shortfall is roughly 1%, small next to the $4.32 gap on earnings. But it needs no adjustment — and neither does the deceleration from 14% growth to 9–10%.

The slowdown shows up in the segment guides. Global Business Solutions, the small-business side, grew 16% to $12.9 billion in 2026; the 2027 guide is 13–14%. Credit Karma grew 20% to $2.6 billion, guided to 11–13%. Mailchimp shrank 1% at $1.3 billion and is expected to shrink again. The hardest brake is on the consumer side: a segment that grew 11% is guided to 4–6%, with TurboTax at 2–3%.

TurboTax's Unit Problem

TurboTax's 2026 comes down to a single line of arithmetic: revenue rose 7% while the number of returns filed fell 2%.

Total U.S. TurboTax returns came to 39 million — 34.9 million online, 4.1 million desktop. Online units fell 2%, desktop units 7%. With revenue at $5.3 billion, price per return carried all of the growth. Divide $5.3 billion by 39 million and the average works out to roughly $136 a return.

That was the model for years: units can stay flat as long as price and package upgrades lift revenue. In 2026 the model jammed. CEO Sasan Goodarzi named the reason on the call:

"Price is now the number one reason customers leave TurboTax."

The 2027 plan follows directly from that diagnosis. Intuit will deliberately cut prices on its do-it-yourself tax products and accept lower revenue per customer. The arithmetic is easy to see: if average revenue per return falls 5% and revenue is still to grow 2–3%, units have to rise about 8%. A line that shrank 2% in 2026 is being asked to grow 8% in a year.

The same logic is running on the small-business side: the company launched QuickBooks Free and QuickBooks Lite and said more than 20,000 customers signed up in the first month. Online paying customers grew 3% over the year.

Goodarzi framed the reset as a choice rather than a retreat:

"We are creating the pressure. We are not being pressured."

The Free Competitor Left; the Customers Left Anyway

One detail makes the picture stranger. For years Intuit's most-discussed threat was Direct File, the government's free filing system. That system is gone: the Treasury ended the two-year pilot in late 2025, citing low usage and cost — fewer than 0.5% of the 146 million returns filed in 2025 went through it, at roughly $138 a return.

The state-backed free competitor left the stage, and TurboTax units fell anyway. The competition is not coming from government but from a new cost structure. When Goldman Sachs cut Intuit to Sell on June 2, 2026, lowering its target from $519 to $276, it rested the case on a cost comparison: by the firm's estimate, AI-based systems can process a return for about $0.12. That is an estimate, not a verified cost figure — but the distance between the two numbers explains why price moved to first place.

Timeline

Bull and Bear

What the Market Did

The chart below shows Intuit over the past three months; the earnings report lands at the right edge.

For contrast, the broad technology index. The move in Intuit is company-specific; there is no break of similar size in the Nasdaq 100 on the same night.

What Is Left

Intuit repurchased $5.5 billion of stock in fiscal 2026, 96% more than the year before, and the share count fell 2% to 277 million. The quarterly dividend was raised 15% to $1.38. How dividends work Operating income is guided up 17–18% while earnings per share are guided up 23–24%; part of that spread comes from the shrinking share count.

Those levers lift the profit line. They do not lift revenue growth. The test for 2027 is the January–April tax season: will the lower price bring back the returns that were lost? The signal will not arrive with the first-quarter report in November but with the unit data at the end of next April. How valuation works

This piece draws on Intuit's fourth-quarter and full-year fiscal 2026 earnings release of August 25, 2026, the footnotes to the guidance table in that release, transcripts of the same day's earnings call, and Reuters reporting on the outlook. Analyst estimates are as compiled by LSEG. Goldman Sachs's per-return cost figure is the firm's own estimate, not a verified cost disclosure. Pricing and unit data come from company disclosures; share prices are from the August 25, 2026 session and the after-hours market that followed.