TipRanks Smart Value #63: Intelligent Value

Shrilekha Pethe on May 19, 2026

Dear Investors,

Welcome to the 63^rd edition of the TipRanks Smart Value Newsletter.

This Week’s Top Value Pick: Intuit (INTU)

Intuit (INTU) is a U.S.-based financial software company that develops cloud-based solutions for consumers, small businesses, and accounting professionals. Its core platforms include tax preparation, accounting, personal finance, payroll, and marketing tools, led by products such as TurboTax, QuickBooks, Credit Karma, and Mailchimp. The company leverages artificial intelligence, data analytics, and a vast customer ecosystem to drive recurring revenue growth, expand its financial services capabilities, and enhance customer engagement across its platform.

Growth Ledger

Intuit was founded in 1983 when Scott Cook set out to simplify personal financial management through software. The company first gained traction with Quicken, a consumer finance program that allowed individuals to manage household budgets and banking activities on personal computers. Quicken’s early success positioned Intuit as a pioneer in consumer financial software and established the foundation for the company’s future expansion into tax preparation and small business services.

A major turning point arrived during the 1990s with the launch and rapid adoption of TurboTax, which transformed Intuit into a dominant force in digital tax preparation. As personal computers and internet usage expanded, TurboTax benefited from shifting consumer behavior and created a recurring, highly seasonal revenue stream tied to annual tax filings. Around the same period, Intuit expanded into small business financial software through QuickBooks, which became one of the most widely used accounting platforms for small and mid-sized businesses. QuickBooks broadened Intuit’s revenue mix beyond consumer tax products and evolved into a key long-term earnings driver through services including payroll, payments, bookkeeping, lending, and broader financial management tools.

During the 2000s and 2010s, Intuit underwent a significant business transformation, shifting away from packaged desktop software toward cloud-based subscription services. This transition improved recurring revenue visibility, strengthened customer retention, and created more stable cash flow generation. To deepen customer engagement and increase average revenue per user, Intuit expanded the QuickBooks ecosystem with integrated payroll, payments, marketing, and business management capabilities.

At the same time, the company streamlined its portfolio by divesting non-core assets. In 2016, Intuit sold Demandforce and later separated from Quicken, sharpening its focus on its core tax and small business platforms. The company then used targeted acquisitions to strengthen the QuickBooks ecosystem. In 2017, Intuit acquired TSheets, adding employee scheduling and time-tracking capabilities for businesses with hourly workers. In 2020, it acquired TradeGecko to strengthen inventory and order management solutions for product-based businesses.

Under CEO Sasan Goodarzi, Intuit accelerated its acquisition strategy as it evolved into a broader AI-driven financial technology platform. The company acquired Credit Karma in 2020, expanding deeper into consumer finance, credit monitoring, lending, and personalized financial recommendations while extending customer engagement beyond tax season. The following year, Intuit completed its largest acquisition with the roughly $12 billion purchase of Mailchimp, adding millions of users and expanding its small business marketing and customer engagement capabilities.

Together, these strategic moves transformed Intuit from a software provider focused primarily on taxes and personal finance into a broader financial technology ecosystem. Today, its combination of subscription software, financial services, AI capabilities, and integrated business tools continues to support durable revenue growth, expanding profitability, and strong free cash flow generation.

Revenue Engine

Intuit operates a financial technology and software platform business model focused on consumers, small businesses, self-employed professionals, and accountants. The company generates most of its revenue through subscription-based software, transaction and payment services, tax preparation fees, advertising and referral income, and financial service products offered across its ecosystem. Its core platforms include TurboTax for consumer tax preparation, QuickBooks for accounting and business management, Credit Karma for consumer financial services, and Mailchimp for marketing automation.

Operationally, Intuit’s business is largely divided between its Consumer segment, which serves individuals through tax products such as TurboTax, and its Global Business Solutions Group (GBSG), which focuses on small businesses through QuickBooks and related services. Within GBSG, the Online Ecosystem represents the company’s cloud-based subscription and service platform, including QuickBooks Online, payroll, payments, and other integrated financial tools.

A key strength of Intuit’s business model is the highly recurring nature of its revenue streams. QuickBooks Online operates primarily on a subscription model, generating recurring monthly or annual revenue from businesses that rely on the platform for accounting, payroll, payments, invoicing, inventory management, and bookkeeping. As customers adopt additional services within the QuickBooks ecosystem, Intuit benefits from higher average revenue per customer and stronger retention rates. The company also earns transaction-based revenue from payment processing, payroll services, and lending products, creating additional monetization opportunities beyond software subscriptions.

TurboTax remains another major earnings driver, benefiting from the recurring need for annual tax filing in the United States. The platform’s large installed user base, automation capabilities, and AI-driven assistance tools help maintain strong customer engagement and pricing power. Meanwhile, Credit Karma expands Intuit’s reach into year-round consumer financial engagement through credit monitoring, personal loans, insurance, and credit card recommendations, generating advertising and referral revenue tied to financial product placements.

Intuit’s business model also benefits from significant ecosystem integration and network effects. Small businesses using QuickBooks often integrate payroll, payments, marketing, and tax preparation services into a single platform, increasing switching costs and improving customer retention. The acquisition of Mailchimp further strengthened Intuit’s ability to offer customer relationship management and marketing tools to small businesses, deepening platform engagement.

Looking ahead, continued earnings growth is supported by the ongoing shift toward cloud-based financial software, increased adoption of AI-driven automation tools, cross-selling opportunities across Intuit’s ecosystem, and expansion into higher-value financial services. Combined with the company’s scalable software model, strong brand recognition, and recurring revenue base, these factors support durable margins and strong free cash flow generation.

AI Advantage

Intuit is increasingly positioning itself as an AI-driven financial technology platform rather than simply a tax or accounting software provider. Management estimates the company operates within a roughly $300 billion total addressable market, while current penetration of 6% leaves substantial room for long-term expansion. The company’s strategy is centered around three major growth drivers: AI-powered financial assistance, expansion of financial services such as payments and payroll, and growth into the larger mid-market enterprise software category.

The company’s biggest strategic priority is what management calls “AI plus Human Intelligence,” or AI + HI. Rather than relying solely on automation, Intuit combines AI-driven software agents with access to accountants, tax professionals, and bookkeeping experts. Management believes this hybrid model creates a competitive advantage due to the compliance, liability, and regulatory complexity of financial decisions. Importantly, management said customers have shown a willingness to pay higher prices for the combination of automation and expert guidance.

Early adoption trends suggest the strategy is gaining traction. More than 3 million customers have used Intuit’s AI agents, with over 85% returning to use them again. Within QuickBooks, the company’s accounting AI agent categorized roughly 237 million transactions in January alone, representing more than half of all transactions processed during the month. Intuit also stated that its business tax AI agent identified more than $1,000 in incremental deductions on average per customer, while its finance agent saves businesses an estimated 17 to 18 hours per week. Meanwhile, QuickBooks Live, the company’s human-assisted bookkeeping and accounting service, grew more than 50% year over year.

Another important growth driver is Intuit’s expansion into higher-value financial services embedded directly within QuickBooks. Payments, payroll, lending, and cash flow tools generate recurring and transaction-based revenue streams while increasing customer retention and switching costs. Strong payment volume growth during the quarter suggests this strategy is becoming an increasingly important contributor to revenue and free cash flow growth.

Management also sees a major long-term opportunity in the mid-market enterprise software segment through Intuit Enterprise Suite (IES). Historically, Intuit primarily served small businesses, but IES is designed for larger and more complex organizations that have traditionally relied on older ERP systems. Management views the mid-market ERP category as a roughly $90 billion opportunity.

Momentum in the segment accelerated during the quarter. New IES contracts increased by roughly 50% quarter-over-quarter, prompting Intuit to expand its direct sales force by approximately 30%. Adoption is also increasingly being driven by accountants and advisory firms, with nearly one-third of new contracts influenced by accountant recommendations, up roughly 10 percentage points from the prior quarter. The company also signed partnerships with several top 20 accounting firms, including Citrin Cooperman and Eide Bailly, helping strengthen credibility and distribution in the mid-market segment. Intuit also launched a Construction Edition for IES, marking the beginning of a broader rollout of industry-specific ERP solutions.

Artificial intelligence partnerships with Anthropic and OpenAI also attracted investor attention. Management emphasized that customer data and proprietary financial AI models remain entirely within Intuit’s platform and are contractually protected. Intuit also retains 100% of the economics from its AI products, with no revenue-sharing agreements tied to outside large language model providers. Management’s position is that general-purpose AI providers are unlikely to replicate Intuit’s regulatory infrastructure, trusted financial data ecosystem, and compliance capabilities.

Durable Dynamics

The company also provided useful insight into the health of its small business customer base. Employee hours worked among QuickBooks customers increased by roughly 4%, with trends improving in January relative to October. Mid-market customer revenue grew approximately 6%, while broader small business revenue increased at low single-digit rates. Cash reserve levels remained generally stable, particularly among higher-value mid-market and small business customers. Management noted especially healthy conditions in IT services, manufacturing, wholesale trade, and nondiscretionary service industries, while advertising, retail, and discretionary spending categories remained weaker.

While investors continue to monitor several areas, the broader picture remains supported by Intuit’s strong operating momentum and resilient business model. Mailchimp’s recovery timeline has been extended beyond fiscal 2026, but management’s indication that “all options are on the table” suggests flexibility in pursuing strategic actions that could improve performance and unlock long-term value. Meanwhile, concerns around AI disruption may be less significant than they initially appear, as the complex, regulated, and high-liability nature of tax and accounting work continues to create meaningful barriers to entry and strengthen Intuit’s competitive position.

Investors are also watching potential effects from reported staffing reductions at the Internal Revenue Service, although any impact would likely be tied more to the timing of tax-related activity than to underlying demand for Intuit’s products. Similarly, slower growth at Credit Karma could reflect difficult comparisons following exceptionally strong prior-year performance in credit cards and personal loans rather than a deterioration in business fundamentals. However, these factors appear more like manageable near-term variables than structural challenges, while Intuit’s recurring revenue model, ecosystem strength, and expanding AI capabilities continue to support its long-term growth outlook.

Momentum Machine

Over the past three years, Intuit has delivered consistent growth, with revenue and EPS increasing at CAGR rates of approximately 11% and 19%, respectively. The company’s expansion was driven largely by its Global Business Solutions segment, which benefited from customer growth in QuickBooks Online, periodic price increases, migration toward higher-value subscription tiers, and broader adoption of online services. The recovery of Credit Karma also contributed meaningfully to growth, while TurboTax continued to generate steady gains, particularly through TurboTax Live. In addition, Intuit’s ongoing shift from desktop products toward cloud-based platforms improved revenue quality by increasing recurring subscription revenue and strengthening customer retention.

Notably, earnings growth consistently outpaced revenue growth during the period. This reflected the benefits of operating leverage, expanding margins, AI-driven productivity improvements, restructuring initiatives, share repurchases, and improving profitability at Credit Karma.

That momentum continued into fiscal Q2 FY26, as Intuit delivered strong results across both its consumer and business platforms. Revenue increased 17% year-over-year to $4.7 billion, exceeding expectations, while operating income rose 44% to $855 million. Adjusted operating income grew 23% year-over-year to $1.5 billion, reflecting continued operating leverage and healthy demand across the company’s ecosystem. Adjusted EPS increased 25% to $4.15, also surpassing estimates. Revenue growth for the first half of fiscal 2026 reached 18%, running ahead of management’s full-year guidance of 12% to 13%.

The Global Business Solutions Group remained the company’s primary growth engine during the quarter. Segment revenue increased 18%, or 21% excluding Mailchimp, to $3.2 billion, while Online Ecosystem revenue grew 21%, , to $2.5 billion. Growth was supported by continued adoption of QuickBooks Online, customer additions, pricing improvements, and expansion into larger businesses through QuickBooks Advanced and Intuit Enterprise Suite, which together grew roughly 40%. Online accounting revenue increased 24%, while Online Services revenue rose 18%, driven by strength in payroll, payments, and money-related services. Payment activity also remained robust, with total online payment volume, including Bill Pay, increasing 29%, while Bill Pay volume nearly doubled from the prior year. The desktop ecosystem also delivered solid performance, with revenue increasing 10%, supported by strong demand for QuickBooks Desktop Enterprise.

The consumer business also contributed meaningfully to results, with revenue increasing 15% to $1.5 billion. Growth was driven by continued strength across both TurboTax and Credit Karma. Credit Karma revenue rose 23%, supported by strong demand in personal loans, credit cards, and auto insurance products. Meanwhile, TurboTax revenue increased 12%, despite IRS tax return filings declining by more than 5% early in the tax season, suggesting continued customer engagement and market share gains.

Looking ahead, management expects revenue growth of approximately 10% in fiscal Q3, while adjusted EPS is projected at a midpoint of $12.48, modestly below Street expectations. Although some investors expressed concern regarding lighter third-quarter margin guidance, management reaffirmed its FY26 outlook with confidence. Intuit continues to project FY26 revenue growth of 12% to 13%, implying revenue of approximately $21.1 billion at the midpoint, alongside continued double-digit earnings growth. The outlook remains supported by ongoing expansion across QuickBooks, TurboTax, Credit Karma, payments, payroll, and AI-driven financial services, with adjusted diluted EPS expected to reach approximately $23.08 at the midpoint for the full year.

Growth Repriced

Shares of Intuit have declined by around 40% over the past year as investors weighed several concerns, including the potential impact of AI on traditional software business models, the expansion of the IRS Direct File program, and weaker-than-expected growth at Mailchimp. The selloff reflected broader uncertainty around how rapidly software companies can adapt to evolving AI trends, particularly as investors reassessed valuations across the sector.

However, Intuit’s underlying business performance has remained relatively resilient despite the stock weakness. The company delivered strong revenue growth in Q2 FY26 and continued to generate momentum across key areas such as QuickBooks, Credit Karma, and its enterprise offerings. Much of the debate has shifted toward the pace of monetization rather than the strength of the underlying business, as Intuit continues to build an integrated financial ecosystem supported by recurring revenue streams, expanding AI capabilities, and a differentiated model that combines automation with financial expertise.

Investor attention is also increasingly shifting toward Intuit’s fiscal Q3 results scheduled for May 20, which could serve as an important near-term catalyst for the stock. While management previously guided for continued revenue and earnings growth, investors will likely focus less on quarterly results themselves and more on commentary around AI monetization, QuickBooks momentum, Credit Karma trends, and any changes to the company’s full-year outlook.

The valuation reset has significantly reduced the premium that Intuit historically commanded. INTU is now trading at more than a 50% discount to its historical averages based on non-GAAP trailing and forward P/E ratios, forward EV/Sales, EV/EBITDA, and price-to-cash-flow metrics. Relative to peers such as Salesforce, Workday, Bill Holdings, and ADP, Intuit currently trades in a more moderate valuation range based on a non-GAAP trailing and forward P/E basis.

The company’s forward PEG ratio of roughly 1.07x is higher than that of many peers, such as Salesforce and Bill, reflecting the premium investors have historically been willing to assign to Intuit’s stronger competitive position in tax and small-business software. However, with analysts forecasting roughly 14–16% EPS growth in the coming years and management continuing to support double-digit revenue and earnings expansion, Intuit increasingly fits the profile of a growth at a reasonable price (GARP) investment rather than a purely high-multiple growth stock.

A PEG ratio near 1.0 is often viewed as indicating that valuation remains relatively balanced compared with projected earnings growth, suggesting investors are not paying an excessive premium for future expansion. Intuit’s long-term outlook continues to be supported by strong network effects, proprietary financial data, regulatory complexity in tax services, and its AI + Human Intelligence strategy, which combines automation with expert financial guidance. Management believes this approach strengthens customer engagement, increases platform stickiness, and creates a competitive advantage that general-purpose AI providers may struggle to replicate.

On a forward EV/Sales basis, Intuit trades in the higher range relative to Bill, Salesforce, and Workday, although well below the premium multiples many SaaS companies commanded during the software boom. Meanwhile, Intuit’s forward EV/EBITDA multiple sits near the higher end of its peer group but remains within a reasonable range for a high-margin software platform.

Analysts remain bullish about INTU as Intuit continues to generate operating and free cash flow that closely tracks earnings, providing substantial internal funding for AI investments, product development, and capital allocation initiatives. Continued expansion of the QuickBooks and enterprise ecosystem through payments, payroll, and additional services is also increasing customer spending and retention, supporting recurring revenue growth over time.

Street consensus currently implies roughly 44% upside from current share levels, while more bullish forecasts suggest upside of around 117%. The wide dispersion in analyst targets appears driven less by disagreement over current operating performance and more by different assumptions regarding Intuit’s long-term growth trajectory and the impact of AI on the business. This outlook is further supported by discounted cash flow analysis, which indicates that INTU shares may be trading at an estimated 50% discount to intrinsic value.

Intuit has maintained a disciplined approach to shareholder returns while balancing growth investments and capital allocation. The company has paid dividends since 2011 and has increased its payout consistently for the past 14 consecutive years, delivering an annual dividend growth rate of approximately 15% over the last decade. Despite this strong growth, Intuit maintains a relatively conservative payout ratio of roughly 21% of adjusted earnings, leaving substantial room to continue investing in the business while supporting future dividend increases.

The company has also continued to return meaningful capital to shareholders in recent periods. During the six months ending January 31, 2026, Intuit declared quarterly cash dividends totaling $684 million. For the most recent quarter, the company announced a dividend of $1.20 per share, representing a 15% year-over-year increase.

The company has also remained active with share repurchases. During the first six months of fiscal 2026, Intuit repurchased approximately $1.1 billion of its shares under its existing buyback program, including $961 million during the fiscal second quarter alone. To support continued capital returns, the board approved an additional $3.2 billion in repurchase authorization in August 2025, increasing remaining buyback capacity to approximately $3.5 billion as of January 31, 2026.

Investing Takeaway

From a value perspective, Intuit increasingly appears to represent a case of a high-quality business becoming more attractively priced rather than a business facing structural deterioration. Recent market concerns have compressed the stock’s valuation, but the company’s underlying fundamentals remain supported by recurring revenue streams, strong customer retention, durable competitive advantages, and expanding cash generation. Unlike many software businesses that depend on constant customer acquisition, Intuit benefits from deeply embedded products that become increasingly valuable as customers adopt additional services across its ecosystem. Its combination of regulatory barriers, proprietary financial data, and AI-driven capabilities creates a business model that may be more resilient than broader software sentiment suggests. For long-term investors, Intuit increasingly resembles a growth-at-a-reasonable-price opportunity, where temporary uncertainty has created a potentially more favorable entry point into a durable, compounding business.

Category: Smart Value