Intuit Inc (NASDAQ:INTU, XETRA:ITU) shares opened about 19% lower on Thursday despite the company posting fiscal third quarter results that topped Wall Street expectations, as investors focused on a weaker long-term outlook for TurboTax and plans to cut roughly 17% of its workforce.
The financial software company reported fiscal third-quarter revenue of $8.56 billion, up 10.4% from a year earlier and slightly ahead of analysts’ estimates of $8.52 billion.
Adjusted earnings came in at $12.80 per share, above consensus expectations of $12.48 per share.
For the quarter, consumer revenue rose 8% to $5.3 billion. TurboTax revenue increased 7% to $4.4 billion, while Credit Karma revenue climbed 15% to $631 million. ProTax revenue was flat year over year at $278 million.
Intuit’s Global Business Solutions segment posted stronger growth, with revenue rising 15% to $3.3 billion. Online Ecosystem revenue increased 19% to $2.5 billion. Excluding Mailchimp, Global Business Solutions revenue grew 17%, while Online Ecosystem revenue rose 22%.
Looking ahead, the company said it expects TurboTax Live revenue to grow 36% to $2.8 billion for the full fiscal year, accounting for about 53% of total TurboTax revenue. TurboTax Live customers are expected to increase 38%.
The strong Q3 performance was overshadowed by the news that Intuit plans to cut 3,000 jobs worldwide, representing roughly 17% of its workforce.
According to an internal memo seen by Reuters, the layoffs are part of an effort to streamline operations and sharpen the company’s focus on key growth areas, including artificial intelligence initiatives.
Intuit said it expects to record restructuring charges of between $300 million and $340 million, primarily in the fourth fiscal quarter.
The company also outlined expectations for slower growth in parts of its TurboTax business, even as it raised full-year guidance overall.
Intuit forecast total TurboTax Online units would decline about 2% and projected its share of e-file tax returns to fall by roughly one percentage point. The company also said TurboTax Online paying units are expected to grow about 2%, driven by higher average revenue per user as more customers opt for assisted offerings and expedited refunds.
Pay-nothing customers are expected to total around 7 million, down from 8 million a year earlier.
While Intuit modestly increased its full-year outlook, investors appeared concerned about slowing overall growth trends. Total revenue growth decelerated to 10% year-over-year in the quarter.