Intuit shares drop despite Q3 beat on TurboTax weakness, workforce reduction

Intuit Inc (NASDAQ:INTU, XETRA:ITU) shares opened astir 19% little connected Thursday contempt the institution posting fiscal 3rd 4th results that topped Wall Street expectations, arsenic investors focused connected a weaker semipermanent outlook for TurboTax and plans to chopped astir 17% of its workforce.

The fiscal bundle institution reported fiscal third-quarter gross of $8.56 billion, up 10.4% from a twelvemonth earlier and somewhat up of analysts’ estimates of $8.52 billion.

Adjusted net came successful astatine $12.80 per share, supra statement expectations of $12.48 per share.

For the quarter, user gross roseate 8% to $5.3 billion. TurboTax gross accrued 7% to $4.4 billion, portion Credit Karma gross climbed 15% to $631 million. ProTax gross was level twelvemonth implicit twelvemonth astatine $278 million.

Intuit’s Global Business Solutions conception posted stronger growth, with gross rising 15% to $3.3 billion. Online Ecosystem gross accrued 19% to $2.5 billion. Excluding Mailchimp, Global Business Solutions gross grew 17%, portion Online Ecosystem gross roseate 22%.

Looking ahead, the institution said it expects TurboTax Live gross to turn 36% to $2.8 cardinal for the afloat fiscal year, accounting for astir 53% of full TurboTax revenue. TurboTax Live customers are expected to summation 38%.

The beardown Q3 show was overshadowed by the quality that Intuit plans to chopped 3,000 jobs worldwide, representing astir 17% of its workforce.

According to an interior memo seen by Reuters, the layoffs are portion of an effort to streamline operations and sharpen the company’s absorption connected cardinal maturation areas, including artificial quality initiatives.

Intuit said it expects to grounds restructuring charges of betwixt $300 cardinal and $340 million, chiefly successful the 4th fiscal quarter.

The institution besides outlined expectations for slower maturation successful parts of its TurboTax business, adjacent arsenic it raised full-year guidance overall.

Intuit forecast full TurboTax Online units would diminution astir 2% and projected its stock of e-file taxation returns to autumn by astir 1 percent point. The institution besides said TurboTax Online paying units are expected to turn astir 2%, driven by higher mean gross per idiosyncratic arsenic much customers opt for assisted offerings and expedited refunds.

Pay-nothing customers are expected to full astir 7 million, down from 8 cardinal a twelvemonth earlier.

While Intuit modestly accrued its full-year outlook, investors appeared acrophobic astir slowing wide maturation trends. Total gross maturation decelerated to 10% year-over-year successful the quarter.