Intuit’s newest earnings report gave traders recent proof for the bull case Morgan Stanley laid out earlier than the corporate’s fiscal third-quarter outcomes, whereas additionally leaving a few of Wall Road’s greatest issues round TurboTax and synthetic intelligence unresolved.
The corporate reported fiscal third-quarter income of $8.56 billion, up 10% from a yr earlier, whereas GAAP diluted earnings per share rose 11% to $11.09. Non-GAAP diluted earnings per share climbed 10% to $12.80, as Client income elevated 8% and International Enterprise Options income rose 15%.
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These outcomes landed after Morgan Stanley framed the quarter as a key take a look at for Intuit. In a be aware given to TheStreet by Morgan Stanley, analyst Keith Weiss saved an Obese ranking on Intuit, named it a Prime Choose in large-cap software program, and set a $580 worth goal on the inventory. The be aware stated shares had fallen about 40% yr to this point earlier than the report and traded at 19 occasions calendar 2027 GAAP EPS, creating what Morgan Stanley considered as a good risk-reward setup.
Intuit raised its full-year fiscal 2026 income outlook to a spread of $21.34 billion to $21.37 billion, representing progress of about 13% to 14%. It additionally raised its outlook for non-GAAP working earnings and non-GAAP EPS, with the corporate now anticipating non-GAAP EPS of $23.80 to $23.85.
TurboTax nonetheless carries the controversy
Within the quarter, Intuit stated Client income rose to $5.3 billion, whereas TurboTax income grew 7% to $4.4 billion. Credit score Karma income elevated 15% to $631 million, pushed by power in private loans, auto insurance coverage, and residential loans, whereas ProTax income was flat from the prior yr.
The corporate’s full-year tax steering confirmed each the power and the stress within the enterprise. Intuit expects TurboTax Dwell income to develop 36% to $2.8 billion and symbolize about 53% of complete TurboTax income, with TurboTax Dwell clients anticipated to develop 38%. On the identical time, the corporate expects complete TurboTax On-line items to say no about 2%, TurboTax share of e-files to say no about 1 level, and pay-nothing clients to fall to roughly 7 million from 8 million final yr.
The be aware stated traders have been nervous that lower-cost tax choices and AI-native entrants may stress TurboTax items and common income per buyer, particularly amongst easy DIY filers. Morgan Stanley argued TurboTax nonetheless has benefits in client belief, prior-year continuity, tax-form imports, built-in submitting workflows, refund visibility, and entry to skilled assist when returns develop into extra complicated.
