Investing.com -- Intuit (NASDAQ:INTU) posted fiscal third quarter results that topped analysts expectations, but shares in the group slumped in premarket trading as investors fretted over a loss of free users at its all-important TurboTax service.
The firm behind personal finance portal Credit Karma and accounting software QuickBooks announced quarterly earnings per share of $9.88 on revenue of $6.74 billion. The numbers beat Wall Street estimates of $9.38 and $6.65 billion, respectively, in a sign that users were reacting postively to investments in artificial intelligence and enhanced tax filing services.
“The era of AI is one of the most significant technology shifts in our lifetime, and our strategy to be the global AI-driven expert platform is delivering significant benefits to our customers and strong results across the company,” Chief Executive Sasan Goodarzi said in a statement.
However, the number of people using TurboTax's free offering during the three months ended on April 30, which includes tax filing season in the U.S., dipped by about 1 million versus the year-ago period.
Analysts at Barclays flagged that TurboTax may be struggling to attract higher-end customers. It also shed its market share of users paying lower prices for TurboTax.
"[L]ower units for consumer tax due to “free” competition will raise questions that could concern investors," the analysts wrote in a note to clients.
In a call with investors, Goodarzi argued that Intuit is "not interested" in attracting customers seeking out its free TurboTax service, saying that these users are often "bouncing between platforms" searching for no-cost tax filing options. Instead, he added, the business is focused on maximizing the "quality of the customers."
For its current quarter, Intuit guided for adjusted earnings in a range of $1.80 to $1.85 per share, representing growth of approximately 13 to 14%, and revenue between $3.06 billion to $3.10 billion. Analysts were expecting adjusted per-share income of $1.92 on revenue of $3.05 billion.
Intuit also lifted its prediction for annual adjusted earnings per share to a range of $16.79 to $16.84, or growth of approximately 17%. It had previously guided for growth of 12% to 14%.
Meanwhile, revenue is expected to increase by approximately 13% to $16.16 billion to $16.2 billion, up from a prior outlook for an uptick of 11% to 12%.
Yasin Ebrahim contributed to this report.