Intuit: A Tale of Two Companies
TurboTax Live grew 36%. DIY unit share fell. Mailchimp is being run for cash. Mid Market Grew ~40%
It was the best of quarters. It was the worst of quarters.
It was the best of quarters because Assisted Tax, aka TurboTax Live, grew 36%, Intuit/QuickBooks’ mid-market expansion grew nearly 40%, and the money platform grew 30%. Management raised full-year guidance for the second time this fiscal year, bought back a record amount of stock, and raised the dividend 15%.
It was the worst of quarters because CEO Sasan Goodarzi admitted Intuit “lost on price” at the low end of the consumer tax base, total IRS filings shrank for the season, the company announced a 17% reduction in force, and the $12 billion Mailchimp acquisition was demoted to cash management.
The market overwhelmingly sided with the second story.
The stock fell roughly 20% on the print and now sits around $302 per share. Far below its 52-week high of $813.70
Intuit’s fiscal third quarter contained two companies. A quality business solidifying its market position and growing by moving upmarket, and a business under AI-and-pricing pressure at the low end.
I’ve written before that I think the market is overstating the AI disruption risk to Intuit and underweighting AI’s potential to reinforce its position. I added to the position on the way down, bringing it up to a two-thirds weight. Then they released their Q3 2026 earnings and the stock dropped another 20%. Goldman also recently downgraded it to Sell, and Intuit now sits roughly 62% below its 52-week high of $813.70.
So this is a thesis check — a deep dive into the two different companies that exist inside Intuit. It’s also a reexamination of what I wrote in March, and a reverse DCF valuation update.
This is not a trade decision. Not yet, but one will have to be made very soon.
The Best of Times Company
If Intuit were only the company described in the first half of its own press release, the 56% drawdown would be a tremendous gift. Three engines are firing, and all three are the ones I argued AI would strengthen.
Assisted Tax = Freestyle Chess
TurboTax Live revenue grew 36% to roughly $2.8 billion. More than double management’s own long-term 15–20% framing. Customers were up 38% and new customers (excluding one-time offers) were up 29%.
Live is now 53% of total TurboTax revenue, up eleven points year over year, and retention ticked up two points.
Upselling to TurboTax Live has been a margin enhancer and now it is also looking like a strong acquisition channel.
In March I compared this to freestyle chess.
The AI does the calculation, the human owns the strategy and the liability. Goodarzi essentially said the same thing on the call: customers in this segment “buy confidence, not code,” and they spend roughly seven times more on experts than on software alone.
Mid-Market Expansion
Combined online-ecosystem revenue for QuickBooks Online Advanced plus the Intuit Enterprise Suite grew about 38% in the quarter, and IES contracts grew 37% sequentially.
The direct sales force is scaling up 30%, and in August they’ll launch consumption-based pricing for AI agents paired with existing subscriptions. Potentially a new catalyst for FY27.
Recently, a fractional CFO stated that they’ve seen a 200% year-over-year increase in IES adoption, and in some instances reverse migration, where growing clients came back to the Intuit/QuickBook ecosystem from the more expensive ERPs like NetSuite and Sage.
Money Platform
The money platform and consumer cross-sell are scaling too.
Total online payment volume grew 30% (18% excluding bill pay), with bill-pay adoption the standout.
On the consumer side, the cross-monetization is working too.
Customers using both TurboTax and Credit Karma carry roughly 30–35% higher ARPU than single-product users, more than 35% of TurboTax customers now adopt fast-money offerings, and TurboTax filers who start in Credit Karma are guided to grow 54% year over year. Credit Karma itself grew 15%, with the full-year guide raised to +19%.
Increased Capital Returns
Intuit repurchased $1.6 billion of its stock in Q3. That’s more than double from the same quarter a year-ago. Over the last nine-month, buybacks are up over 60% to $3.34 billion. Management also authorized a new $8 billion buyback plan, and raised the dividend 15%.
The Worst of Times Company
Then there is the other company.
Low End Disruption
The most exposed part of TurboTax’s customer base is price-sensitive DIY filers, who typically earn under $50,000 per year.
Earlier, management guided for total paying TurboTax Online units to grow 2%, with ARPU and mix doing most of the work. But total online units, including the pay-nothing base, were revised to −2%. That pay-nothing base fell from 8 million to about 7 million, and TurboTax’s share of e-files declined by a point. The headline +7% TurboTax revenue growth came from price and mix, not units.
The strategic response is to shift from complexity-based SKUs (one price for a W-2, more for a W-2 plus charitable donations) to value-based pricing: let simple filers in cheaply or for free, then monetize them through Credit Karma and the money platform.
The main question is whether this guidance change is due to price (management’s story), AI substitution (part of Goldman’s Sell thesis), or broader macro forces.
On the macro side, total IRS filings are down about 30 bps versus an expected +1%. That equates to about 2 million “missing” filers, mostly manual filers. According to Goodarzi, this is the worst category contraction since the post-COVID season.
Management is adamant it is price and macro, but that is what you would expect them to say. They are not going to come out and admit to AI disruption; it would hammer the stock even more than it already has.
Either way, it means fewer new customer acquisitions that could later be upsold as incomes rise and filings become more complicated. Management can overcome pricing and macro with the right strategy. Low end disruption by AI means these customers are never coming back.
Mailchimp Overpay Confirmed
Back in March I argued the real Mailchimp risk was never AI killing email; it was Intuit overpaying and then aggressively raising prices to justify the $12 billion purchase price, pushing current and future customers away.
Q3 made it official.
Mailchimp revenue is down slightly year over year, and the asset has been openly demoted to cash management.
In Aujla’s words, its cash-flow profile “will generate more value for Intuit than a third party is likely to pay for that asset in the current environment.”
Translation: Intuit can’t sell Mailchimp without taking a big loss so they’ll run it for cash and minimize reinvestment.
17% RIF
Intuit is cutting about 3,000 employees, roughly 17% of the workforce.
Goodarzi was explicit that the cuts are not AI-driven, breaking them into four buckets: fewer management layers, fewer coordination roles, removal of TurboTax/Credit Karma integration duplication, and right-sizing Mailchimp. Maybe that’s it?
But this is the second reduction in two years, and the 2024 framing that Intuit doesn’t “do layoffs to cut costs” didn’t last past 2026.
And Aujla’s clarification that the majority of savings will flow to the bottom line (versus 2024, when savings were reinvested) is management stating that they are now optimizing for cash and EPS rather than reinvestment like they said back in 2024.
Mid Market Ceiling
The same IES that’s winning the low-to-mid market reportedly keeps losing the high-mid. Once a client needs serious multi-entity consolidation and audit readiness, evaluations tip to NetSuite, Sage, or SAP. “Moving upstream” is a big growth lever but upstream growth may have a ceiling.
Reconciling the Two
Does monetizing beyond tax — Credit Karma plus the money platform, a 30–35% ARPU lift — more than offset price compression at the low end?
Can lower share and/or lower ARPU at the low end be more than offset by a higher mix in Assisted Tax?
Intuit currently has only about 10% of the ~$23B assisted tax prep market, and filers in this category generate, on average, 2.6x the ARPU vs DIY.
Intuit could lose at the low end and still grow if it takes assisted share from less technology-forward competitors faster than its low-end base erodes.
Because this is unknowable for several quarters, it increases uncertainty around the name, and market participants do not like uncertainty. They demand a lower multiple to compensate for the wider range of outcomes. Intuit’s current stock price reflects this rerating.
My framework from March still holds up. Who bears the liability when the AI is wrong, what regulatory barriers exist, how real switching costs are, and how proprietary the data is. But the answers have moved unevenly since March.
Credit Karma’s lead-gen model remains the highest structural risk. Even though TurboTax concerns garner all the attention.
TurboTax got worse at the low end and better in Assisted.
Mailchimp is being run for cash and not a top of funnel priority now.
And QuickBooks’ core is intact, and making great inroads up market.
Valuation
I updated the reverse DCF and my Bear, Base, and Bull cases around its new numbers.
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