Intuit Inc. INTU

Key data

The business

Intuit sells the software small businesses and households run their money on. QuickBooks, its biggest product, is the accounting system tens of millions of small firms use to invoice, pay staff and file sales tax. Once a business has closed a year's books inside it, moving to a rival means re-entering its whole financial life, so it rarely leaves. That is the moat: switching costs baked into the system of record. TurboTax does the same job once a year for consumers filing taxes. Credit Karma shows people their credit score for free and gets paid when it steers them to a card or loan they take. Mailchimp, bought in 2021, does email marketing and is the one piece that is not working. The company groups these as Global Business Solutions (QuickBooks plus Mailchimp) and a cross-cutting Online Ecosystem line that captures the recurring, cloud revenue, up 19% last year and 23% without Mailchimp.

The numbers

The shape of Intuit's year is one giant quarter and three ordinary ones. April, when America files its taxes, dwarfs the rest.

The April quarter alone earned more than the other three combined. The concentration flagged a week ago held rather than eased: the July quarter grew revenue 14% yet net income slipped to $363 million from $381 million a year earlier, because a tax benefit the year before became a $177 million tax bill this time. Everything rests on April.

Across full years the compounding is steadier, and faster on the bottom line than the top.

Revenue compounded 14% a year over four years, earnings per share almost 23%. The gap is margin expansion and a shrinking share count doing their work: operating margin is now about 27%, and the free-cash-flow yield sits near 9.5%, though stock pay of roughly 10% of revenue means the owner keeps less than that headline suggests. The four earnings beats in a row are real but small. The line that matters is the guide.

Which segment grows tells you where the fear is. QuickBooks and Credit Karma are compounding at double digits. TurboTax and Mailchimp are not.

What this memo believes that the market does not: the blended 10% guide is dragged down by the two slow lines, while the engine that compounds, QuickBooks online and Credit Karma, is still growing mid-teens, and the stock is priced as if the whole thing has stalled. The number that settles it is QuickBooks online growth in fiscal 2027.

Management

Capital allocation is the tell. Intuit bought back $5.5 billion of stock in fiscal 2026, up 96% from the year before, buying hardest as the shares fell by half, shrinking the share count 2% net of stock pay. It raised the dividend to $1.38 a quarter and has $7.9 billion left authorized. It issued $1.75 billion of notes to cover debt coming due, with net debt at half a year's cash profit, modest. Insiders sold a trivial $314,000 over the past year and bought nothing; plan status is not disclosed, and at that size it says nothing either way. This is a team returning cash aggressively into its own de-rating, the right instinct if the de-rating is wrong.

How it fails or surprises you

TurboTax gets disintermediated. Consumer is guided to just 4% to 6% growth and TurboTax to 2% to 3%. Free AI tax preparation and the IRS's own Direct File aim straight at Intuit's highest-margin cash engine. If the April 2027 consumer line comes in flat or down, the crown jewel is cracking and the low multiple is earned.

The market sees a slowdown the bulls wave off. The stock at 4.1 times sales sits below its entire twelve-year range while earnings compound 23%. Either this is a generational mispricing or the market has correctly sniffed that AI erodes both bookkeeping and tax. What would prove the bull read wrong: Online Ecosystem growth without Mailchimp, up 23% last year, sliding toward single digits in fiscal 2027.

AI turns into money, not just a threat (right tail). Intuit's "Big Bets" put AI agents to work doing the bookkeeping and the tax for the customer instead of helping them do it, at a higher price per customer. It owns the data and the distribution to charge for done-for-you work. The market pays nothing for this today. The first sign would be revenue per QuickBooks customer accelerating through fiscal 2027.

Closing thoughts

What settles this is Intuit's own revenue line in fiscal 2027, and one number inside it: how fast QuickBooks online and Credit Karma actually grow once the slow lines are stripped out. If they hold mid-teens, the 10% blended guide is conservative, the AI fear is overdone, and a stock at a twelve-year valuation low re-rates as the growth proves durable. If they too decelerate, the market was early rather than wrong, and cheap stays cheap. An ambiguous print, high-single-digit growth with soft TurboTax, leaves you holding a 9.5% free-cash-flow yield and a 23% earnings compounder at 16 times earnings while you wait, which is not a bad place to wait. The right tail looks fatter than the left: the downside is loudly flagged and the stock already fell 53%, while nothing in the price pays for AI monetization landing.

The bet is still that small businesses keep running QuickBooks to send invoices and do their books, and keep paying more, that Credit Karma keeps matching people to loans and credit cards it gets paid for, and that TurboTax survives free AI tax help and government free filing. What breaks it is the April consumer number turning negative alongside QuickBooks online growth slipping under the mid-teens. Watch those two together in the fiscal 2027 April quarter; they tell you first whether this was a trough or a top.