Intuit’s TurboTax Loses Free Users, Stock Price Drops

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Intuit, the maker of popular tax filing software TurboTax, saw its stock price fall significantly after the company reported a decline in free users. Here’s a breakdown of the situation:

Free User Loss and Investor Concerns:

  • Intuit lost 1 million free TurboTax users, dropping from 11 million to 10 million in fiscal year 2024.
  • This decrease coincides with the IRS launching a free pilot program for online tax filing in some states.
  • Investors worried about the decline in TurboTax’s market share, causing the stock price to drop 8.3%.

Intuit’s Strategy and Rebuttal:

  • Intuit is focusing on users with more complex tax situations who might pay for additional services and expert assistance.
  • The company highlighted a 10% increase in average revenue per user, suggesting they’re attracting higher-paying customers.
  • CEO Sasan Goodarzi downplayed the importance of free users, stating they’re not interested in customers “bouncing between platforms.”
  • Intuit claims the IRS pilot program wasn’t a major factor in the user decline.

Other Developments:

  • Intuit’s business-oriented products like QuickBooks Accounting showed moderate growth.
  • The company announced the departure of Credit Karma CEO Kenneth Lin, potentially signaling disruption.
  • Intuit raised its full-year earnings and revenue guidance despite the user decline.

Uncertainties Remain:

  • The long-term impact of the IRS free filing program and competition in the low-cost tax software market is unclear.
  • Whether Intuit’s strategy of focusing on higher-paying customers will be successful remains to be seen.

Overall, Intuit is facing challenges in the free tax filing market. While the company is focusing on more profitable user segments, investors are concerned about the long-term impact on TurboTax’s market share.